Question

The Widner Company manufactures two products: Stainless Serving Spoons and Stainless Serving Forks. The costs and revenues are as follows: Spoons Forks Sales price $150 $88 Variable cost per unit 80 42Total demand for Spoons is 14,000 units and for Forks is 9,000 units. Machine time is a scarce resource. During the year, 54,000 machine hours are available. Spoons requires 5 machine hours per unit, while Forks requires 3 machine hours per unit. How many units of Spoons and Forks should Widner produce? Spoons Forks A. 14,000 0 B. 8,307 4,154 C. 10,800 0 D. 5,400 9,000 Option A Option C Option B Option D

Answer 1

Option D. 5,400 9,000

Step-by-step explanation:

The computation for the number of units produced is shown below:

But before that first determined the following calculations

Particulars Spoons Forks

Selling Price $150.00 $88.00

Less:

Variable cost per unit $80.00 $42.00

Contribution margin

per unit $70.00 $46.00

Machine hour per unit 5 3

Contribution margin

per machine hour $14.00 $15.33

As we can see that the contribution margin per machine hour of the fork is greater so it should be the first utilized

For 9,000 forks, total machine hours is

= 9,000 × 3

= 27,000

Now no of the spoons produced would be

= 27000 ÷ 5

= 5,400