Question
Shamrock Co. manufactures three types of computer desks. The income statement for the three products and the whole company is shown below: Product A Product
Shamrock Co. manufactures three types of computer desks. The income statement for the three products and the whole company is shown below:
Product A | Product B | Product C | Total | |||||
---|---|---|---|---|---|---|---|---|
Sales | $88,000 | $110,000 | $135,000 | $333,000 | ||||
Variable costs | 46,000 | 75,000 | 125,000 | 246,000 | ||||
Fixed costs | 25,200 | 18,000 | 18,000 | 61,200 | ||||
Total costs | 71,200 | 93,000 | 143,000 | 307,200 | ||||
Operating income (loss) | $16,800 | $17,000 | $(8,000) | $25,800 |
The company produces 1,000 units of each product. The companys capacity is 17,000 machine hours. The machine hours for each product are 7 hours for Product A, 5 hours for Product B, and 5 hours for Product C. Fixed costs are allocated based on machine hours.
If the current production levels are maintained, should the company eliminate Product C?
Shamrock Co. select an option --> (should not or should). eliminate Product C. |
If the company can sell unlimited quantities of any of the three products, which product should be produced?
Shamrock Co. should produce select a product --> Product B or Product C or Product A ? |
Suppose the company can sell unlimited quantities of any of the three products. If a customer wanted to purchase 500 units of Product C, what would the minimum sale price per unit be for this order?
Minimum sale price = | $. | per unit |
The company has a contract that requires it to supply 500 units of each product to a customer. The total market demand for a single product is limited to 1,500 units. How many units of each product should the company manufacture to maximize its total contribution margin including the contract? (Fill in the blanks)
Shamrock Co. should manufacture | |||
---|---|---|---|
Product A | units | ||
Product B | units | ||
Product C | units |
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