At Westonci.ca, we provide clear, reliable answers to all your questions. Join our vibrant community and get the solutions you need. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.
Sagot :
Let's carefully analyze the data and determine the steps required to solve the problem.
Given:
- Current selling price per unit: \$52
- Current production costs per unit:
- Direct materials: \$14
- Direct labor: \$16
- Variable overhead: \$9
- Fixed overhead: \$9
To refine product quality and functionality, material and labor costs increase by 20%.
We need to determine:
a) The incremental profit or loss if the refined version of the product could be sold for \$57 per unit.
b) Whether the product should be processed further based on incremental profit or loss determined in part (a).
### Steps to determine the solution:
1. Calculate the increased material and labor costs:
- Incremental increase in material cost = 20% of direct materials
[tex]\[ \text{Incremental materials cost} = 0.20 \times 14 = 2.80 \][/tex]
- Incremental increase in direct labor cost = 20% of direct labor
[tex]\[ \text{Incremental labor cost} = 0.20 \times 16 = 3.20 \][/tex]
2. Calculate the new material and labor costs:
- New materials cost per unit
[tex]\[ \text{New materials cost} = 14 + 2.80 = 16.80 \][/tex]
- New labor cost per unit
[tex]\[ \text{New labor cost} = 16 + 3.20 = 19.20 \][/tex]
3. Calculate the initial and refined total production costs per unit:
- Initial total production cost per unit:
[tex]\[ \text{Initial cost} = 14 + 16 + 9 + 9 = 48 \][/tex]
- Refined total production cost per unit:
[tex]\[ \text{Refined cost} = 16.80 + 19.20 + 9 + 9 = 54.00 \][/tex]
4. Determine the incremental profit or loss:
- Initial profit per unit:
[tex]\[ \text{Initial profit} = 52 - 48 = 4 \][/tex]
- Refined profit per unit (selling price of refined product is \$57):
[tex]\[ \text{Refined profit} = 57 - 54 = 3 \][/tex]
- Incremental profit or loss:
[tex]\[ \text{Incremental profit or loss} = \text{Refined profit} - \text{Initial profit} = 3 - 4 = -1 \][/tex]
(This indicates a loss of \$1 per unit.)
### Conclusion:
a. The incremental profit or loss if Lakeside could sell the refined version of its product for \[tex]$57 per unit is a loss of \$[/tex]1.00.
b. Given that the incremental profit is actually a loss, Lakeside should not process the product further. Therefore:
[tex]\[ \text{Should it be processed further?} \quad \text{No} \][/tex]
Given:
- Current selling price per unit: \$52
- Current production costs per unit:
- Direct materials: \$14
- Direct labor: \$16
- Variable overhead: \$9
- Fixed overhead: \$9
To refine product quality and functionality, material and labor costs increase by 20%.
We need to determine:
a) The incremental profit or loss if the refined version of the product could be sold for \$57 per unit.
b) Whether the product should be processed further based on incremental profit or loss determined in part (a).
### Steps to determine the solution:
1. Calculate the increased material and labor costs:
- Incremental increase in material cost = 20% of direct materials
[tex]\[ \text{Incremental materials cost} = 0.20 \times 14 = 2.80 \][/tex]
- Incremental increase in direct labor cost = 20% of direct labor
[tex]\[ \text{Incremental labor cost} = 0.20 \times 16 = 3.20 \][/tex]
2. Calculate the new material and labor costs:
- New materials cost per unit
[tex]\[ \text{New materials cost} = 14 + 2.80 = 16.80 \][/tex]
- New labor cost per unit
[tex]\[ \text{New labor cost} = 16 + 3.20 = 19.20 \][/tex]
3. Calculate the initial and refined total production costs per unit:
- Initial total production cost per unit:
[tex]\[ \text{Initial cost} = 14 + 16 + 9 + 9 = 48 \][/tex]
- Refined total production cost per unit:
[tex]\[ \text{Refined cost} = 16.80 + 19.20 + 9 + 9 = 54.00 \][/tex]
4. Determine the incremental profit or loss:
- Initial profit per unit:
[tex]\[ \text{Initial profit} = 52 - 48 = 4 \][/tex]
- Refined profit per unit (selling price of refined product is \$57):
[tex]\[ \text{Refined profit} = 57 - 54 = 3 \][/tex]
- Incremental profit or loss:
[tex]\[ \text{Incremental profit or loss} = \text{Refined profit} - \text{Initial profit} = 3 - 4 = -1 \][/tex]
(This indicates a loss of \$1 per unit.)
### Conclusion:
a. The incremental profit or loss if Lakeside could sell the refined version of its product for \[tex]$57 per unit is a loss of \$[/tex]1.00.
b. Given that the incremental profit is actually a loss, Lakeside should not process the product further. Therefore:
[tex]\[ \text{Should it be processed further?} \quad \text{No} \][/tex]
We hope this was helpful. Please come back whenever you need more information or answers to your queries. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.
