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salantis [7]
3 years ago
12

13. Assume that Cane’s customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the raw

material available for production is limited to 160,000 pounds. How many units of each product should Cane produce to maximize its profits?
Business
1 answer:
timurjin [86]3 years ago
3 0

Answer:

80000 unit of Alpha

Explanation:

This is a Limiting factor/resource constraint question. In certain situations entities suffer from shortage of necessary resources (e.g: shortage of material, labor hours, machine hours), in such circumstances entities strive to allocate the constraint resources to the production of those products which generate the highest contribution per limiting factor and help maximize total contribution. In this case the limiting factor for Cane is Raw material.

Lets suppose that each unit of <em>Alpha and Beta sell for $120 and $80</em> respectively and variable cost per unit of <em>Alpha and Beta is $69 and $20 </em>respectively. Each unit of <em>Alpha and Beta require 2 and 5 pounds</em> of raw material for production respectively.

Now that we have supposed the data we have to compute contribution per unit and then contribution per limiting factor and based on the ranking (i.e highest first) of contribution per limiting factor we decide which product should be given priority for resource allocation.

<em>Lets calculate contribution per unit.</em>

Alpha:

Contribution per unit= SP-VC

Where, SP stands for selling price and VC stands for variable cost.

CPU= 120-69

CPU=$51

Beta:

Contribution per unit= 80-40

CPU=$40

<em />

<em />

<em>Now, lets calculate contribution per limiting factor.</em>

Alpha:

CLF: $51÷2

CLF: $25.5        1st Rank

Beta:

CLF: $40÷5

CLF: $8              2nd Rank

So clearly Alpha has a greater contribution per limiting factor and it implies that Alpha will earn the highest contribution margin therefore Cane should produce and allocate resources to Alpha first and then Beta if there remains any?

Profit maximizing output:

It requires 2 pounds of raw material to produce one unit of Alpha (i.e 80000×2=160000) Therefore Cane should produce 80000 units of Alpha only in order to maximize its profits.

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mario62 [17]

Answer: When the switch is closed.

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On January 1st, 2019, Pizza Company awarded 5 million of its no par common shares to key personal. The award is subject to forfe
Allisa [31]

Answer:

A. Debit Compensation Expense $10,000,000

Credit PIC-Excess Par $10,000,000

Explanation:

The total cost of the stock options granted is allocated to the respective years in which the stock compensation relates as below:

Total stock compensation=market value per share on grant date*number of stock options

Total stock compensation=$10*5,000,000=$50,000,000

compensation expense allocated per year=$50,000,000/5

compensation expense per year=$10,000,000

6 0
3 years ago
The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate
Bezzdna [24]

Answer:

Option B is the correct answer,1.05

Explanation:

Present value index can be computed using the below formula:

present value index=present value of cash inflows/initial amount invested

present value of cash inflows=annual net cash flow*present value factor of annuity

annual net cash flow=$93,750

present value factor of annuity=4.212

present value of cash inflows=$93,750*4.212=$394,875.00  

initial amount invested is $375,000

present value index=$394,875.00/$375,000 =1.053

The present value index of this project is approximately 1.05,which is the option B in the multiple choices

3 0
3 years ago
Crain Company has a manufacturing subsidiary in Singapore that produces high-end exercise equipment for U.S. consumers. The manu
Dovator [93]

Answer:

Crain Company's total taxes would decrease by $64,740

Explanation:

the income statement for the parent company:

total revenue $2,490,000

- COGS          ($1,490,000)

<u>- S&A costs     ($390,000)</u>

EBIT                   $610,000

<u>- taxes              ($201,300)</u>

net income       $408,700

the income statement for the subsidiary:

total revenue $3,490,000

- COGS          ($2,490,000)

<u>- S&A costs      ($199,000)</u>

EBIT                   $801,000

<u>- taxes              ($368,460)</u>

net income       $432,540

total taxes paid = $201,300 + $368,460 = $569,760

if the parent company increases the selling price by 20%

the income statement for the parent company:

total revenue $2,988,000

- COGS          ($1,490,000)

<u>- S&A costs     ($390,000)</u>

EBIT                 $1,108,000

<u>- taxes              ($365,640)</u>

net income       $742,360

the income statement for the subsidiary:

total revenue $3,490,000

- COGS          ($2,988,000)

<u>- S&A costs       ($199,000)</u>

EBIT                   $303,000

<u>- taxes               ($139,380)</u>

net income        $163,620

total taxes paid = $365,640 + $139,380 = $505,020

the parent company's total taxes would decrease by = $569,760 - 505,020 = $64,740

5 0
3 years ago
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VikaD [51]

Answer is Industry

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An industry is a group of companies whose primary business activities like production, marketing, procurement and product design are related. In order words, an industry is a group of companies that sells related goods and services to satisfy similar customer needs in a particular economy.

Since EZ Electronics Inc., Neo Digital Inc., and Techno Products Corp., are all grouped as manufacturers and sellers of consumer electronics, it describes their similarities, of which their relative attractiveness or consumer preference can be compared with each other. Therefore, they are a part of an industry.

8 0
3 years ago
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