A small construction firm specializes in building and selling single-family homes. The firm offers two basic types of houses, mo
del A and model B. Model A houses require 4000 labor hours, 2 tons of stone and 2000 board feet of lumber. Model B houses require 10000 hours of labor, 3 tons of stone and 2000 board feet of lumber. The firm has currently 400000 hours of labor, 150 tons of stone and 200000 board feet of lumber. Model A yields $1000 profit and model B yields $2000 profit.Assume that the firm is able to sell all units it can build. What mix of Model A and Model B units should the firm construct to maximize the profit?
1 answer:
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Answer:
1.- 35,000 helment x 0.6 kilograms = 21,000 STD quantity
2.- 21,000 kilograms x $8 per kilogram = $168,000
3.- 9,000 F
4.- 12,000 U
Explanation:
std cost $8.00
actual cost $7.60
quantity 22,500
difference $0.40
The actual cost for each kilogram is lower than expected. This means the copamny saved cash in the purchase. This variance is favorable.
saved 0.40 per kilograms x 22,500 purchased
price variance $9,000.00
std quantity 21000.00
actual quantity 22500.00
std cost $8.00
difference -1500.00
The actual quantity was higher than expected, this variance will be unfavorable
1,500 extra kilograms x $8 each =
quantity variance $(12,000.00)