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Kitchen Magician, Inc., has assembled the following data pertaining to its two most popular products. Blender Hiloer Direct material $ 24 5 41 Direct labor
Kitchen Magician, Inc., has assembled the following data pertaining to its two most popular products. Blender Hiloer Direct material $ 24 5 41 Direct labor 13 31 Manufacturing overhead @ $53 per machine hour 58 183 Cost if purchased from an outside supplier 66 114 annual demand (units) 26,2466 39,9438 Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $36. Kitchen Magician's management has a policy of lling all sales orders, even if it means purchasing units from outside suppliers. Required: 1. If 51,000 machine hours are available, and management desires to follow an optimal strategy, how manyr units of each product should the rm 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 mixerto $24 per unit, how many units of each product should be manufactured? Purchased
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