Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please explain your process and include essential supporting calculations and tables Aaron Johnson has just opened the Johnson Company. The company makes four products: Selling

Please explain your process and include essential supporting calculations and tables

image text in transcribed

Aaron Johnson has just opened the Johnson Company. The company makes four products: Selling price Direct material per unit Direct labor and Var OVH costs per unit Fixed costs $10,000/month $84 8 lbs. $28 $20 2 lbs. $5 $56 5 lbs. $27 $70 All four products use the same direct material, Yarn, which costs $3 per pound. Due to restrictions by the vendor, Johnson Company can buy only 5000 pounds of Yarn each month. Demand for the Johnson Company products far exceeds the Yarn available. Due to contractual obligations, Johnson Company must produce at least 200 units of each of the four products each month. You just began work as the controller and Aaron Johnson has asked you to recommend, via memorandum, how many units of each product Johnson Company should produce each month, why you recommend this mix, and what the firms' operating income would be for a typical month with this recommended product mix. Secondly, Aaron Johnson has a lead on an additional source for more Yarn she may be able to obtain an additional 1000 pounds per month from a second vendor. In the same memo, tell her the maximum price per pound you recommend she should pay for this additional 1000 pounds of Yarn and why. Explain which product(s) (and how many) she should make with it and how much total extra she could net for each $0.01 less than your recommended maximum price per pound she is able to negotiate.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Labor and Employment Law Text and Cases

Authors: David Twomey

15th edition

1133188281, 978-1133711841, 1133711847, 978-1285247632, 978-1133188285

Students also viewed these Accounting questions