A.
Kitchen Magician, Inc., has assembled the following data pertaining to its two most popular products. Blender Mixer Direct material $ 26 45 Direct labor 20 33 Manufacturing overhead @ $54 per machine hour 54 108 Cost if purchased from an outside supplier 68 116 Annual demand (units) 28,000 34, 000 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $42. Kitchen Magician's management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers. Required: 1. If 60,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased? 2. With all other things constant, if management is able to reduce the direct material for a mixer to $26 per unit, how many units of each product should be manufactured? Purchased?Required: 1. If 60,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased? 2. With all other things constant. if management is able to reduce the direct material for a mixer to $26 per unit, how many units of each product should be manufactured? Purchased? Complete this question by entering your answers in the tabs below. Required 1 Required 2 If 60,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the rm manufacture? How many units of each product should be purchased? Manufacture Purchase Required 1 Required 2 With all other things constant, if management is able to reduce the direct material for a mixer to $26 per unit, how many units of each product should be manufactured? Purchased? (Round your intermediate calculations to 2 decimal places.) Manufacture Purchase Johnson and Gomez, Inc., is a small rm involved in the production and sale ofelectronic business products. The company is well known for its attention to quality and innovation. During the past 15 months. a new product has been under development that allows users improved access to email and video images. Johnson and Gomez code named the product the Wireless Wizard and has been quietly designing two models: Basic and Enhanced. Development costs have amounted to $201,000 and $282,000, respectively. The total market demand for each model is expected to be 53,000 units, and management anticipates being able to obtain the following market shares: Basic, 20 percent; Enhanced, 15 percent. Forecasted data follow. Basic Projected selling price $ 419.99 Per-unit production costs: Direct material 55.99 Direct labor 29.99 Variable overhead 49.99 Marketing and advertising {fixed but avoidable) 298,999 Sales commission5* 15% *Computed on the basis of sales dollars. Enhanced $ 519.89 87.99 43 .99 61.99 395,999 19% Since the start of development work on the Wireless Wizard, advances in technology have altered the market somewhat. and management now believes that the company can introduce only one of the two models. Consultants conrmed this fact not too long ago, with Johnson and Gomez paying $35,800 for an indepth market study. Sales salaries (excluding commission) will be $92,000 no matter which product is sold. The marketing and advertising costs indicated for each product are incurred only if that product is sold. Other fixed overhead is expected to be the same. regardless of which product is introduced. Required: 1. Compute the unit contribution margin for both models. (Round your answers to 2 decimal places.) Basic Enhanced Unit contribution margin2. Which of the following should be ignored in making the product-introduction decision? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Development costs Market study Marketing and Advertising Fixed manufacturing overhead Variable manufacturing overhead Sales salariesReq 3A Req 3B Prepare a financial analysis and determine which of the two models should be introduced. (Round intermediate calculations to 2 decimal places.) Basic Enhanced Total contribution margin Income $ 0 $ 0Req 3A Req 3B The company would be advised to select the Enhanced model or Basic model. The company would be advised to select the Basic model
