Assignment
04
BU330 Accounting for Managers
Directions: Be sure to make an
electronic copy of your answer before submitting it to Ashworth College
for grading.
Factoring resource
constraints into product mix decisions
Rose
Incorporated manufactures two types of vases, small and large. The following
per-unit data are available.
Small
Vase Large Vase
Sale price $60 $100
Variable costs $35 $60
Machine hours required for 1 vase 1 2
Total fixed
costs are $600,000, and Rose Incorporated can sell a maximum of 25,000 units of
each type of vase annually. Machine hour capacity is 50,000 hours per year.
a. Determine the contribution margin per unit for each type of vase.
b. Determine the contribution margin per machine hour for each type of
vase.
c.
Determine the number of units
of each style of vase that Rose Incorporated should produce to maximize
operating income.
d. What is the dollar amount of the maximum operating income as
calculated in C above?
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