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Duxeva Produces Two Products Named BigBlast and LittleBlast The Production Lines for Both Products Are Highly Automated, So

question 118

Multiple Choice

Duxeva produces two products named BigBlast and LittleBlast. Last month 2,000 units of BigBlast and 4,000 units of the LittleBlast were produced and sold. Following are average prices and costs for last month: $\begin{array}{lcc}&\underline{\text { BigBlast }}&\underline{\text { LittleBlast }}\\\text { Selling price } & \$ 100 & \$ 200 \\\text { Direct materials } & (25) & (75) \\\text { Direct labor } & (15) & (35) \\\text { Variable overhead } & (5) & (30) \\\text { Product line fixed costs } & (10) & (40) \\\text { Corporate fixed costs } &\underline{ (25) }&\underline{ (25) }\\\quad \text { Average margin per unit } &\underline{\underline{ \$ 20 }}& \underline{\underline{\$(5) }}\end{array}$
The production lines for both products are highly automated, so large changes in production cause very little change in total direct labour costs. Workers who are classified as direct labour monitor the production line and are permanent employees who regularly work 40 hours per week. All costs other than "corporate fixed costs" listed under each product line could be avoided if the product line were dropped. Using only the information provided above, Duxeva could make several types of decisions.
Possible decisions include:
I $\quad$ Special order
II $\quad$ Product emphasis
III $\quad$ Keep or drop
IV $\quad$ Constrained resources

Definitions:

Pectoralis Minor

A thin, triangular muscle located beneath the pectoralis major, involved in movements of the shoulder and scapula.

Serratus Anterior

A muscle on the side of the chest that assists in moving the shoulder blade.

Subclavius

A small muscle located under the clavicle, which plays a role in stabilizing the clavicle during arm and shoulder movements.

Rotator Cuff

A group of muscles and tendons surrounding the shoulder joint, maintaining its stability and allowing a wide range of arm movements.