Harvest Bakery produces regular and whole wheat bread. The regular bread is sold at $3...
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Harvest Bakery produces regular and whole wheat bread. The regular bread is sold at $3 per loaf, and the whole wheat bread is sold at $5 per loaf. The variable cost of making the regular bread is $1.80 per loaf. It costs an extra $1 to make the whole wheat bread. It takes 6 labor hours to make 100 loaves of regular bread and 9 labor hours to make 100 loaves of whole wheat bread. There are 1,500 hours of labor time available for production each week. The maximum weekly sales for the regular and whole wheat bread are 8,000 and 3,000 loaves, respectively. Fixed production costs total $120,000 per year. All selling costs are fixed.
Required: (a) Calculate the optimal production level in number of loaves 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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