Chapter 10 Principal Managerial Accounting

1.

X Data table E...... Joe's Beach Hut sells three types of cold drinks: 1. Just - Soda in 12-oz. cans for $1.40 per can 2. Just - Soda in 20-oz. bottles for $1.80 per bottle 3. Vitamin Plus in 20-oz. bottles for $2.40 per bottle Joe's Beach Hut pays its suppliers: 1. $0.30 per 12-oz. can of Just - Soda 2. $0.45 per 20-oz. bottle of Just - Soda 3. $0.60 per 20-oz. bottle of Vitamin Plus Joe's Beach Hut's monthly fixed costs include: Hut rental $ 340 Refrigerator rental 80 Joe's salary 1,400 $ 1,820 Total fixed costsRequirements - 1. What is Joe's Beach Hut's constraining factor? What should Joe stock to maximize prots? 2. Suppose Joe's Beach Hut refuses to devote more than 80 linear feet to any individual product. Under this condition, how many linear feet of each drink should Joe's stock? How many units of each product will be available for sale each day? Each morning, Joe lvery stocks the drink case at Joe's Beach Hut in Myrtle Beach, South Carolina The drink case has 120 linear feet of refrigerated drink space Each linear foot can hold either six 12ounce cans or three 20ounce bottles. a (Click the icon to view the information on the cold drinks.) Joe's Beach Hut can sell all the drinks stocked in the display case each morning. Requirement 1. What is Joe's Beach Hut's constraining factor? What should Joe stock to maximize prots? The constraining factor is V _ Data table Direct materials Direct labor Variable overhead Fixed overhead Manufacturing product cost More info Another company has offered to sell Sensor Systems the switch for $22.50 per unit. If Sensor Systems buys the switch from the outside supplier, the idle manufacturing facilities cannot be used for any other purpose, yet none of the xed costs are avoidable. Sensor Systems manufactures an optical switch that it uses in its nal product. The switch has the following manufacturing costs per unit: E (Click the icon to view the costs.) lick the icon to view additional information.) Prepare an outsourcing analysis to determine whether Sensor Systems should make or buy the switch. (For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the switches in-houset) Make Outsource Difference optical switch optical switch (MakeOutsource) Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Total differential cost per unit More info Dairymaid sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $870, yields 600 gallons of plain yogurt. Dairymaid sells the one-gallon tubs for $10 each, and spends $0.12 for each plastic tub. Dairymaid has recently begun to reconsider its strategy. Dairymaid wonders if it would be more protable to sell individual-size portions of fruited organic yogurt at local food stores. Dairymaid could further process each batch of plain yogurt into 12,800 individual portions (314 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Dairymaid would sell each individual portion for $0.46. Packaging would cost $0.12 per portion, and fruit would cost $0.14 per portion. Fixed costs would not change. Dai maid processes organic milk into plain yogurt iclick the icon to view additional information.) Should Dairymaid continue to sell only the gallon-size plain yogurt (sell as is) or convert the plain yogurt into individual-size portions of fruited yogurt (process further)? Why? (Use a minus sign or parentheses for amounts that are typically shown enclosed in parentheses in a sell or process further decisiont) Process Costs Sell As Is Further Difference Expected revenue from selling by the gallon Expected revenue from selling individual portions Additional costs of selling as is by the gallon Additional oasis of processing Individual portions Total net revenue