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. ifftas excess machine capacity buta limited amount of labor time, to which product or
products should DINISIO Ine. devote its excess production?
irithas excess emountoflabor time but limited machine capacity, to which product or
: Should DINISIO Ine. devote ts excess production?
products
problem 14 (Bobadil 50) DELA CRUZ Corp has only 25000 hours of machin time each month
aaceaentctve its two products, MARIA and MARIAN. MARIA hasa contribufon margin of P50 and
MARIAN bas. contrinution margin of P64, MARIA require § machine hours and MARIAN requires
hours
1. DELA CRUZ Corp wants to dedicate 80% of ts machine time to the product that will
Drovidethe mostincome, how much wil be is contribution margi? problem 15. (Bobauilla 58), FAUSTINO Inc. manufactures two products, MICHAEL and GABRIEL-
Contribution margin per unit is determined as follows:
MICHAEL, GABRIEL
Revenue Pp 130 PaO
Variable costs (70) Gs)
Contribution margin. 60 a
‘Total demand for MICHABL Is 16 000 units and for GABRIEL, 8 000 units, Machine hours is a scarce
Tecaurce: Only 42,000 machine hours are available during the year. MICHAEL requires 6 machine
‘hours per unit while GABRIEL requires 3 machine hours per unit.
How many units of MICHAEL and GABRIEL should FAUSTINO Inc. produce? Problem 1 ZARAH hasbeen appreached by foreigner who wants to place a special order fr 35,000 urits
(ofits product ATS at P2250 per unt ZARAM current sel thi item for P39 pe unt, and the tem Nas 2
‘cost of PIS per unt. Further analysis reveals that ZARAM wl not be paying aes commission of 2:50
triton the sales ands packaging eaurement wil save an additional P50 pet unit However, 9
scstonal graphics required on vb wil cost ZARAR P3D G00. Note ao tat fied casts amoung tO
09000 for the precuctin of 30000 unt wl not change. ZARAH decided to cept he order Dut
srotercstomer who buys an average of 2000 unisfor the pvod wats o pay P2250 ony rather han
the regula seling pice of P3800
1. Accepting the special orderwilincrease (decrease profs by how much?
problem 2 RANE Eterprivehas he capac to produce 10000 TAS, but operates at 908 of apse
Crnmrady sel for BO each andcostan average of P50 make, cluding share ofthe mond
fred caso 180.000 A potent! Buyer has offered te buy 1000 GTAS t PAD each.
2. Whatisthe relevant os per unit?
of Paper unit. PATRENZ could
‘role 3 PATRENZ Corporation sla product for P20 with variable com
eee speci rc for 1000 units at PLA
14 \FPATREN@ accepted the order, how many units could ios tthe regular pre before the
dession become unwise?
problem 4 CABRERA nc produces hah val ELS Ut production costs based on production capac
of 100000 units pe year flow
Dect materi ’ so
rect labor 0
‘Overhead (20% variable) 10
Sales price 10
Sling and amin cost (40% variable) 1s 0"
“4 tfeurent operating copay st 70000 SAS yer, what the minimum pice thatthe
ono ere ons rr of 1000S te sre rE ems
cnannel?
5. teuirent operations ule the entice capacity, whats the minimum sling pice that the
roo 000
Variable costs (409000) 60600),
Convrbuten margin 7 sooco 420000
Direct ned costs 0.00 0.000)
Segment margn > s00000 PF 370000
Common xed costs v0) ects)
Net operating income Eom p20 000
DE GURMAN is considering eliminating the MAE branch Doing so wil ring some che existing
ustomer tothe We brach thus sales nth ranch wl crease by 7%.
14, Determine the eect ofthe decision to eliminate MAE banch onthe overall profs of OF
GURMAN, indicate nerease or decrete
Page aot Problem 13 SEVETHLANA's cost to manufacture an unfinished units P40 (30 variable and PLO fie). The
sel price (for the unfinished unit] per unis PSO. The company has unused production capacity and
has Getermined tat units could be finshed ad sold for PS with an increase variable cost Of 40%
"S. Whatis the adstions net income per writ to be gained rising the Unit?
Problem 14 DANIO Corporation produces two preducts fram a join recess Information about thetwo
Jont products fotos veadocsn * (iodo
Antigtes production 2000bs ——4000/bs
Seling pce se pound at stot P30 P46
Aastonal processing ces/pound atest ff (lvariabe) 15 30
Selng ce pr pound after further precesng 0 0
‘The ont costs P85 000, OAM currents both products at sito point
16, FOAVID makes the decison which maximizes profit its profit wil increase by?
Problem 15 DE MESA Production chads ts weely proucton of 5 00 units ef TABLES and 30.000
nse! GAR for whch #800000 common variable oss ae incurred. These two prosuts can be sold
{sis procesid urther Further processing ether proouct doesnot delay the production of
‘oseqventatches fhe ant procure. Blow ae 2detonal data gathered:
Tages CuAns
Unt eng rice without ure procesng Pw PD
Unieseting price with rte procesing By B
“Tota separate wooly variable costs of futher processing eocoo 120600
17, To mavimie DE MES manufacturing cntbuton margin the otal separate variable costs
of further processing that shouldbe incurred each week should amount?
Problem 16. Hannah Coffee shop normaly si 30000 cuss of acafee product, CLARA, every
ranch Acupof coffee sli for P22; variable costs per cup PL; fed Tanufacuingoveead ons
{otal P1500 sch month faba Sling ois atl P3000 each moat
etamine contamination of makin the country has caused HANNAN’ sles to drop ony 0 9000 per
‘month rw ke twa monte efor WANNA wil be able to convince the pub hat ts cafes
Melamine free after whch ls will et normal Oye to de curentow lvl ls, howeve,
Asati thinking about dosing down is onn plant during the twe months itconduts the chercal
‘estan pubiing the eats fs the coffe shop wil be cose es estimated that fed
‘manufctring ovo cots can be teduced 1 105 00 per month ard that xed sling costs canbe
rededby 10%. Startup cass atthe end ofthe shutdown period should total PB COO. HANNA uses
|ustonsime production method no wentres than.
1B na std financial sen, souls HANNAH Cotes Shop shutdown er centinue?
19. Atwhat velo le in cups) forthe two-man per should NANNAN be iniferent
‘between temporarily losing down the Caffe Shop or keeping taper?
Problem 17 DELA CRUZ Crp has ely 25000 hours of machine time each menth to manctature two
roduts, MARA and MARIAN. MARA has 2 cotton margin of 9SO and MARIAN has a contribution
‘margin of P58, MARIA requires machine hours nd MARA requires 8 hore
20. FOBLA CRUZCoep wats to dadcate BOR Fes machine time to the product that wil provide
the mestincome, how much wl bets contrbuton mage?
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