The cost accountant of the Stangren Corporation, your client, wants your opinion of a technique suggested to him by a young accounting graduate he employed as a cost analyst. The following information was furnished for the corporation’s two products, trinkets and gadgets: 698

2 The daily capacities of each department represent the maximum production for either trinkets or gadgets. However, any combination of trinkets and gadgets can be produced as long as the maximum capacity of the department is not exceeded. For example, two trinkets can be produced in the Cutting Department for each gadget not produced and three trinkets can be produced in the Finishing Department for every four gadgets not produced.
3 Materials shortages prohibit the production of more than 180 gadgets per day.
4 The figure shown on page 820 is a graphic expression of simultaneous linear equations developed from the production information above.

Transcribed Image Text:

DAILY CAPACITIES IN UNITS Sales Variable Cutting department Finishing department price cost per unit per unit Trinkets Gadgets 400 240 $50 $30 200 320 70 40