question 1

Vaughan Company manufactures two productstoaster ovens and bread machines. The following data are available:

	Toaster Ovens	Bread Machines
Sales price	$70	$170
Variable costs	$30	$70
Machine hours	5 MH	4 MH
Demand	2,400	800

Vaughan is limited by 1,600 machine hours per month. Marketing limitations indicate that Vaughan can sell a maximum of 2,400 toasters and 750 bread machines per month.

How many bread machines should they produce to maximize profit?

question 2

At the following levels of activity Vaughan Inc had the following costs:

Units Produced	100	500	1,000
Factory supervisor's monthly salary	$4,500	$4,500	$4,500
Total materials cost	$800	$4,000	$8,000
Total delivery costs	$1,400	$1,800	$2,250

Evaluate the following statements:

1. Material costs are a product cost and a mixed cost
2. Factory supervisory costs are a period cost and a fixed cost
3. Delivery costs are period cost and a variable cost