Leonard International produces weekly 20,000 units of Product N and 40,000 units of Product B for which
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Question:
Leonard International produces weekly 20,000 units of Product N and 40,000 units of Product B for which 900,000 common variable costs are incurred. These two products can be sold as is or processed further. Further processing of either product does not delay the production of subsequent batches of the joint products. Below are some information:
PRODUCT N | PRODUCT B | |
Unit selling price without further processing | 25 | 18 |
Unit selling price with further processing | 30 | 22 |
Total separate weekly variable costs of further processing | 100,000 | 90,000 |
To maximize Leonards manufacturing contribution margin, how much should be the total separate variable costs of further processing that should be incurred each week?
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