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1. XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 230,000 machine hours per year. The following information is available for planning purposes: Product A Product B Product C demand for next year ............. 100,000 units 140,000 units 180,000 units selling price per unit ........... $21 $24 $25 variable costs per unit .......... $16 $17 $21 It takes 0.70 machine hours to produce one unit of Product A; 0.80 machine hours to produce one unit of Product B; and 0.50 machine hours to produce one unit of Product C. Calculate the number of units of Product A that XYZ Company should produce in order to maximize its net income. Do not use decimals, the $ or type the word units after your answer. 

ANSWER: 100,000

2. XYZ Company makes two products, W and P, in a joint process. At the split-off point, 60,000 units of Product W and 50,000 units of Product P are available each month. Monthly joint production costs total $120,000 and are allocated to the two products equally. Product W can either be sold at the split-off point for $5.60 per unit or it can be processed further and then sold for $8.80 per unit. If Product W is processed further, additional processing costs of $2.70 per unit will be incurred. Product P can also be sold either at the split-off point for $2.80 per unit or it can be processed further and then sold for $7.70 per unit. If Product P is processed further, additional processing costs of $4.20 per unit will be incurred. However, the further processing of Product P will result in a loss of 8,000 units (i.e., only 42,000 units of Product P will be available for sale if it is processed further). The further processing of Product W will not result in the loss of any units. Calculate what the selling price per unit of Product P needs to be at the split-off point in order for XYZ Company to be economically indifferent between selling Product P at the split-off point or processing Product P further and then selling it. Enter your answer with two places after the decimal point (i.e., $78.90). 

ANSWER: 2.94

3. ABC Company makes 40,000 units per year of a part it uses in the products it manufactures. The per unit product cost of this part is shown below: direct materials .............. $15.30 direct labor .................. 27.40 variable overhead ............. 2.10 fixed overhead ................ 24.70 total ......................... $69.50 An outside supplier has offered to sell ABC Company 40,000 units of this part a year for $66.10 per unit. If ABC Company accepts this offer, the facilities now being used to make this part could be used to make more units of a product that is in high demand. The additional contribution margin that could be earned on this other product would be $100,000 per year. If ABC Company accepts the outside supplier's offer, $21.90 of the fixed overhead cost being applied to the part would be eliminated. The remaining amount would continue to be incurred and would be allocated to the company's remaining products. Calculate the increase in company profits if ABC Company accepts the outside suppliers offer. Do not use decimals or type the word increase after your answer. 

ANSWER: 124,000

4. ABC Company makes 40,000 units per year of a part it uses in the products it manufactures. The per unit product cost of this part is shown below: direct materials .............. $15.30 direct labor .................. 27.40 variable overhead ............. 2.10 fixed overhead ................ 24.70 total ......................... $69.50 An outside supplier has offered to sell ABC Company 40,000 units of this part a year for $66.10 per unit. If ABC Company accepts this offer, the facilities now being used to make this part could be used to make more units of a product that is in high demand. The additional contribution margin that could be earned on this other product would be $100,000 per year. If ABC Company accepts the outside supplier's offer, $21.90 of the fixed overhead cost being applied to the part would be eliminated. The remaining amount would continue to be incurred and would be allocated to the company's remaining products. Calculate the selling price per unit charged by the outside supplier that would make ABC Company economically indifferent between making and buying the part. Enter your answer with two places after the decimal point (i.e., $78.90). 

ANSWER: 69.20

5. Bailey Company manufactures and sells a number of products, including Product R. Results from last year from the sale of Product R are given below: Sales revenue ............................. $750,000 Variable production costs ................. 450,000 Sales commissions ......................... 110,000 Salary of product manager ................. ? Advertising expense ....................... 80,000 Allocated general overhead ................ ? Net operating loss ........................ <55,000> Bailey Company is considering eliminating the production and sale of Product R. The company has determined that if Product R is discontinued, the contribution margin of its other products will increase by $40,000. Based on a cost analysis, the management of Bailey Company has determined that if Product R is discontinued the company's net income will decrease by $25,000. Calculate the amount of allocated general overhead cost for Product R incurred last year. Do not use decimals in your answer. ANSWER: 120,000  6. Jett Company produces a single product and has the capacity to produce 70,000 units of this product each month. The per unit costs of this product when 70,000 units are produced are shown below: direct materials $29.60 direct labor 5.80 variable overhead 2.50 fixed overhead 17.20 variable selling costs 1.80 fixed selling costs 6.70 The normal selling price of the product is $65.30 per unit. Jett is currently selling 68,300 units of this product to regular customers. Jett Company has just obtained a request for a special order of 4,000 units to be shipped at the end of the current month at a discounted price of $50 per unit. The variable selling costs would only be $1.10 per unit on the special order. Calculate the decrease in company profits if Jett Company accepts the special order. Do not use decimals, a minus sign, or type the word decrease in your answer. ANSWER: 480  7. Betty DeRose, Inc. produces and sells two products, L and V. Revenue and cost information for the two products from last month appear below: Product L Product V selling price per unit ........... $15.00 $12.00 variable costs per unit .......... $ 8.00 $ 7.00 For the coming month, Betty would like to use linear programming in order to maximize monthly profits. Each month Betty has 80,000 direct labor hours available and 60,000 machine hours available. Product L requires 5 direct labor hours for each unit and 2 machine hours for each unit. Product V requires 4 direct labor hours for each unit and 8 machine hours for each unit. Calculate the number of units of Product L that should be produced in order to maximize net income. Do not use the $, decimals, or type the word units after your answer. 

ANSWER: 30,000