3-60 (at bottom of first page)

A and B

- Factory reat and depectall be reduced trominated if dropped. drepped. - Elimination of JT4sa will make it possible to climinate two administrative staff positioes with comhined salaries of $30,000 per quarter. 02. 3) 360 Product mit and overtime decisions. Excel Corporation manufactures three products at isplut The plant capacity is limited to 120,000 machine hours per year on a single-shift basis. Direct mato rial and direa laber conts are variable. The following data are available for planning purpose: o Cambridge usiness Publishers Ohyper 3 Docivica Making and Management Accounting Infocmation Required (a) Given the capacity constraint, determine the peodoction levels for the three peoducts that will maximize peotics. (b) If the company authorines overtime in oeder to produce moee units of XI.2, the direct labor cout per unit will be higher by 50% because of the overtime premium. Materials cost and variable overthed cost per unit will be the ume for ovettine peoduction as for regular production. His it worthwhile operatieg overtiene? 3-61 Protitability of order, opportunity cent, and capacity Hedwon Hydrenics, foc, is a corporation (LO2, 3) baved is New York that sells high-qualify hy dronic controt devices: It manafactures two products, HCD 1 and HCD, for which the folkrwing information is available: The average wage rate, including fringe benefits, is 520 per hour. The plant has a capacity of 15.000 difect labor bours, but current productige vses cely 14,000 difect labor bours of capacity. Hudsoe can, if desised, bire additional direct labor up to its capacity of 15.000 direct labor hours. Required (a) A new custemer tas offered to buy 200 enits of HCD2 if Hoatson lowers its price to $400 per unit. How many darect labor hours will be required to produce 200 unies of HCD2? How moch will Hudvon's profit increase or decrease if if accepts this propoul? (Awume all other prises will remain as before.) (b) Suppose the customer has offered iatead to bey 300 units of HCD2 at $400 per usat. How much will the profits increase of decreace if Hodson accepts this proposal? Assums that the company cannot increase its prodoction capacity beyond is.000 direst labor hours. (c) Answer the question is part (b) azvuming that the plant can work overtime. Disect labor costs: for the overtime production increase to $30 per towr. Variatle overiead costs for overtime production are 50% more than for normal pouloctiona 3-62 Clieat mix decision Spencet Cirant, a finaseial plannec, contacts and mects with local individu- (LO2, 3) als to assist with financial planning and investmests in Spencer's ereployer's imestenent services company, Spencer feceives no fee for financial plataing alvice, bet ia addition to his talary, he receiver comminsicas oo client isvetmeers in the investmqnt services company. Conmixsion rater vary across different inveutment peodocth. Spencer's enployer pays office ast phone couts asd atvo ecimburses Spencer for businew-related travel. Satiafied clients have recominended Spencer to their friends, and Spencer now finds himaelf with more clients than be can han Sle is Be 40 bours per week he would like to work. To analyze where to esost profitably spend his tirst. Spencer has clascified his current set of customers into the thrse greups linted here. The houes - Factory reat and depectall be reduced trominated if dropped. drepped. - Elimination of JT4sa will make it possible to climinate two administrative staff positioes with comhined salaries of $30,000 per quarter. 02. 3) 360 Product mit and overtime decisions. Excel Corporation manufactures three products at isplut The plant capacity is limited to 120,000 machine hours per year on a single-shift basis. Direct mato rial and direa laber conts are variable. The following data are available for planning purpose: o Cambridge usiness Publishers Ohyper 3 Docivica Making and Management Accounting Infocmation Required (a) Given the capacity constraint, determine the peodoction levels for the three peoducts that will maximize peotics. (b) If the company authorines overtime in oeder to produce moee units of XI.2, the direct labor cout per unit will be higher by 50% because of the overtime premium. Materials cost and variable overthed cost per unit will be the ume for ovettine peoduction as for regular production. His it worthwhile operatieg overtiene? 3-61 Protitability of order, opportunity cent, and capacity Hedwon Hydrenics, foc, is a corporation (LO2, 3) baved is New York that sells high-qualify hy dronic controt devices: It manafactures two products, HCD 1 and HCD, for which the folkrwing information is available: The average wage rate, including fringe benefits, is 520 per hour. The plant has a capacity of 15.000 difect labor bours, but current productige vses cely 14,000 difect labor bours of capacity. Hudsoe can, if desised, bire additional direct labor up to its capacity of 15.000 direct labor hours. Required (a) A new custemer tas offered to buy 200 enits of HCD2 if Hoatson lowers its price to $400 per unit. How many darect labor hours will be required to produce 200 unies of HCD2? How moch will Hudvon's profit increase or decrease if if accepts this propoul? (Awume all other prises will remain as before.) (b) Suppose the customer has offered iatead to bey 300 units of HCD2 at $400 per usat. How much will the profits increase of decreace if Hodson accepts this proposal? Assums that the company cannot increase its prodoction capacity beyond is.000 direst labor hours. (c) Answer the question is part (b) azvuming that the plant can work overtime. Disect labor costs: for the overtime production increase to $30 per towr. Variatle overiead costs for overtime production are 50% more than for normal pouloctiona 3-62 Clieat mix decision Spencet Cirant, a finaseial plannec, contacts and mects with local individu- (LO2, 3) als to assist with financial planning and investmests in Spencer's ereployer's imestenent services company, Spencer feceives no fee for financial plataing alvice, bet ia addition to his talary, he receiver comminsicas oo client isvetmeers in the investmqnt services company. Conmixsion rater vary across different inveutment peodocth. Spencer's enployer pays office ast phone couts asd atvo ecimburses Spencer for businew-related travel. Satiafied clients have recominended Spencer to their friends, and Spencer now finds himaelf with more clients than be can han Sle is Be 40 bours per week he would like to work. To analyze where to esost profitably spend his tirst. Spencer has clascified his current set of customers into the thrse greups linted here. The houes