Eco-Friendly produces regular and biodegradable trash bags. The regular trash bag is sold at $5...
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Accounting
Eco-Friendly produces regular and biodegradable trash bags. The regular trash bag is sold at $5 per roll, and the biodegradable trash bag is sold at $8 per roll. The variable cost of making the regular trash bag is $3 per roll. It costs an extra $2 to make the biodegradable trash bag. It takes 4 labor hours to produce 100 rolls of regular trash bags and 6 labor hours to produce 100 rolls of biodegradable trash bags. There are 1,500 hours of labor time available for production each week. The maximum weekly sales for the regular and biodegradable trash bags are 5,000 and 2,000 rolls, respectively. Fixed production costs total $120,000 per year. All selling costs are fixed.
Required: (a) Calculate the optimal production level in number of rolls for each product. (b) Prepare a trial balance for the company based on the optimal production level. (c) Compute the total fixed and variable costs.
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