1.Mendosa Company produces three products. All the products use a furnace operation, which has a maximum number of 10,000 hours available for production of all three products. The following information is available:
Product 1 Product 2 Product 3
Unit demand monthly 1,000 1,500 1,000
Per unit information:
- Sales $35.00 $33.00 $29.00
- Variable Costs 15.00 15.00 15.00
- Furnace hours 4 3 2
From a profitability perspective, what order of production and amount would maximize profit?
a. Mendosa should produce the three products in the following order and
- amount: Product 1: 1,000 units, then
- Product 2: 1,500 units, then
- Product 3: 750 units
b. Mendosa should produce the three products in the following order and amount: Product 3: 1,000 units, then
- Product 2: 1,500 units, then
- Product 1: 875 units
c. Mendosa should produce the three products in the following order and amount: Product 1: 1,000 units, then
- Product 2: 1,500 units, then
- Product 3: 1,000 units
d. Mendosa should produce the three products in the following order and amount: Product 2: 1,500 units, then
- Product 1: 1,000 units, then
- Product 3: 750 units
2.A segment of Hazard Inc. has the following data.
- Sales $200,000
- Variable expense $140,000
- Fixed expenses $100,000
If this segment is eliminated, what will be the effect on the remaining company? Assume that 50% of the fixed expenses will be eliminated and the rest will be allocated to the segments of the remaining company.
a. $120,000 increase.
b. $10,000 decrease.
c. $50,000 increase.
d. $10,000 increase.