he Morton Company Produces and sells two products: A and B.Financial data related to producing these two products aresummarized as in the table below.
Product A | Product B | |
Selling Price | $10.00 | $12.00 |
Variable Costs | $5.00 | $10.00 |
Fixed Costs | $2,000 | $600 |
a) If these products are sold in the ratio of four A's for everythree B's, what is the break-even point?
b) If the product mix has changed to five A's to five B's, whatwould happen to the break-even point?
c) In order to maximize the profit, which product mix should bepushed?
d) If both products must go through the same manufacturingmachine and there are only 30,000 machine hours available perperiod, which product should be pushed? Assume that product Arequires 0.5 hours per unit and B requires 0.25 hours per unit.
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