Healthy Snacks produces regular and organic granola bars. The regular granola bar is sold at $2 each,
Question:
Healthy Snacks produces regular and organic granola bars. The regular granola bar is sold at $2 each, and the organic granola bar is sold at $3.50 each. The variable cost of making the regular granola bar is $1.20 each. It costs an extra $0.80 to make the organic granola bar. It takes 5 labor hours to produce 1,000 regular granola bars and 8 labor hours to produce 1,000 organic granola bars. There are 3,000 hours of labor time available for production each week. The maximum weekly sales for the regular and organic granola bars are 20,000 and 8,000 units, respectively. Fixed production costs total $200,000 per year. All selling costs are fixed.
Required: (a) Calculate the optimal production level in number of units for each product. (b) Prepare an income statement for the company based on the optimal production level. (c) Calculate the company's tax liability assuming a tax rate of 22%.
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young