Question
Jayleen Company makes two products: Carpet Kleen and Floor Deodorizer. Operating information from the previous year follows. Carpet Kleen Floor Deodorizer Units produced and sold
Jayleen Company makes two products: Carpet Kleen and Floor Deodorizer. Operating information from the previous year follows.
| Carpet Kleen | Floor Deodorizer | ||||||
| Units produced and sold | 5,000 | 4,000 | |||||
| Machine hours used | 5,000 | 1,000 | |||||
| Sales price per unit | $ | 6 | $ | 14 | |||
| Variable cost per unit | $ | 4 | $ | 12 | |||
Fixed costs of $24,000 per year are presently allocated equally between both products. If the product mix were to change, total fixed costs would remain the same. Assuming there is unlimited demand for both products and Jayleen has 12,000 machine hours available, how many units of each product should be produced and sold?
| Carpet Kleen | Floor Deodorizer | |
| A. | 0 units | 0 units |
| B. | 0 units | 48,000 units |
| C. | 5,000 units | 12,000 units |
| D. | 11,000 units | 4,000 units |
| E. | 12,000 units | 0 units |
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Essentials Of Federal Taxation 2018
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
9th Edition
9781260007640
