Decision Making #1-Sell or Process Further Joint Product Decision

XYZ manufactures A and B from a joint process cost = $70,000. Six thousand pounds of A can be sold at split-off for $20 per pound or processed further at an additional cost of $20,000 and then sold for $23. Ten thousand pounds of B can be sold at split-off for $15 per pound or processed further at an additional cost of $13,000 and later sold for $17.

Required: Which products should be processed further or not? Why?Give the dollar impact to income for each product based on your recommendation.

Recommendation:

Decision making #2-Use of Limited Resources-Singe Constraint

Bush Manufacturing has 28,000 labor hours available for producing M and N. Consider the following information:

M N

Required Labor per unit in hours 4 2

Maximum demand in units 8,000 7,000

Contribution Margin per unit $8 $7.50

Required: What is the optimal product mix(how many M and N should be produced)?Explain your answer and show computations.

Recommendation: