3. When processing our, wheat is bought from farmers for $10 a bushel and processed at a cost of $11. A product that can be fed to cattle is generated and is identiable as a separate product at the split-off point. It can be sold for $70 per 200 pound bag at the split-off. If it is processed further at a cost of $30 per bag, it can be sold for $95. The company can produce 8,000, 200 pound bags. What is the total nancial advantage (disadvantage) of processing it further? $ Put advantage or disadvantage in the second line. 4. Machine hours are the constraint and the company only has 1,000 hours to use to produce 3 products: Product A Product B Product C Selling price per unit $51 $40 $39 Variable costs per unit 30 3 0 21 Machine hours needed per unit 7 2 3 a. Assume the company has no limit on units sold, then the ranking of the products from the most protable to the least protable use of the constrained resource is: (show your work below and the contribution margin per hour) 1. cm per hour $ 2. cm per hour 35 3. cm per hour $ b. What is the largest possible contribution margin the company can make each period? NAME: Your name on this document is required in order to earn the bonus points. CHAPTER 13 BONUS PROBLEMS (increase spacing below as needed to show your work) 1. Orange Corporation produces and sells 13,000 units of Product X each month. The selling price of Product X is $20 per unit, and variable expenses are $14 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $75,000 of the $103,000 in monthly xed expenses charged to Product X would not be avoidable even if the product was discontinued. What is the annual nancial advantage (or disadvantage) of discontinuing Product X? Advantage / Disadvantage Show your math work here. 2. A company makes 3,000 widgets. The per unit costs to make a widget are DM 10 DL 4 VARIABLE MOH 6 FIXED MOH 10 [$3 of these costs can be avoided if the widgets are purchased] If the units are purchased instead of made, all variable costs can be avoided and there will be a chance to rent out part of the factory for $16,000. The cost to buy the units is $30.25 each unit purchased and the company will have to pay freight-in costs of $800. a. What are the relevant costs per unit? b. What kind of cost is the $16,000? c. What should the company domake or buy the widgets? d. How much better off will they be with your decision? 35 Show the numbers you use under each area below. MAKE BUY