Salt Company has 6,000 machine hours available to produce either Product 1 or Product 2. The...

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Accounting

Salt Company has 6,000 machine hours available to produceeither Product 1 or Product 2. The cost accounting departmentdeveloped the following unit information for each product:
Product 1
Product 2
Sales Price
$35
$48
Direct Materials
8
12
Direct Labor
4
3
V. Manu O/H
7
5
F. Manu O/H
4
1
Machine Time Required
15 minutes
60 minutes
To satisfy current customer orders, Salt Company must produce atleast 800 units of each product. Determine how Salt Company shoulduse the 6,000 machine hours to maximize income and satisfy customerexpectations
Chapter 7
What role does the salvage value for a piece of old equipmentplay in a decision to retain or replace equipment?
It is relevant because it reduces the loss on the sale of theold equipment
It is relevant because it increases the cost of the newequipment
It is relevant because it reduces the cost of the newequipment

Answer & Explanation Solved by verified expert

3.9 Ratings (623 Votes)

Product 1 Product 2 SP 35 48 less Direct Mat 8 12 Direct Lab 4 3 Var OH 7 5 Contribution Per unit 16 28 Machine hr require 025 1 Contribution per machine hr 64 28 Since See Answer

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	Product 1	Product 2
Sales Price	$35	$48
Direct Materials	8	12
Direct Labor	4	3
V. Manu O/H	7	5
F. Manu O/H	4	1
Machine Time Required	15 minutes	60 minutes