Ace Company manufactures two products caged A and B that sell fa 5100 and $60 respectively. fads product uses only one type of raw nuterO that cost SS per pound Ace ha s the °panty to annually produce 100,000 units of sada product. The unit cost for oach product at this level of eaparity is given bebw:
|
|
Prodirt
|
|
|
A
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B
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|
Direct Material
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25
|
10
|
|
Direct tabor
|
15
|
10
|
|
Variable Manufacturing Overhead
|
10
|
5
|
|
Traceable Fixed Owrhead
|
15
|
10
|
|
Variable Selling expenses
|
10
|
5
|
|
Common Fixed Overhead
|
15.63
|
9.375
|
|
Total Cost peg Unit
|
$90.63
|
$49.375
|
Ace considers its traceable fined manufacturing overhead to be avoidable, but its common fixed expenses are demand unavoidable and have ban allocated to products based on sales dollars.
Answer each question independently unless instructed otherwise. Use an excel format to answer each question.
1. What is the contribution margin of each product?
2. Assume that Ace uses the absorption method to compute product cost. What is the gross martin per unit of each product?
3. What contribution margin per pound of raw material is awned by eada product?
4. What h the total traceable fixed overhead cost incurred by Ace Company?
5. What is the total common food *sense roared by Me Company?
6. Assume that Ace wools to produce and sell 75.000 urits of A doing the current year. A supplier has off eyed to manufacture and de I wet 75,000 units of Ala a price of $68. If Ace accepts this offer instead of manufacturing those units how much WI profits increase/decrease?