Bacon Company Makes Four Products in a Single Facility $\quad$

question 58

Multiple Choice

Bacon Company makes four products in a single facility. These products have the following unit product costs:
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Products }$
$\begin{array}{lrrrr}&\text { A}&\text { B}&\text { C}&\text { D}\\\text { Direct materials } & \$ 14.30 & \$ 10.20& \$ 11.00& \$ 10.60\\\text { Direct labor } & 19.40 & 27.40 & 33.60 & 40.40 \\\text { Variable manufacturing } & 4.30 & 2.70 & 2.60 & 3.20 \\\text { overhead } & & & &\\\text { Fixed manufacturing } & 26.50 & 34.80 & 26.60 & 37.20 \\\text { overhead } & & & &\\ \text {Unit product cost } & \$64.50&\$75.10&\$73.80&\$91.40& & & \\\end{array}$
Additional data concerning these products are listed below.
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Products }$
$\begin{array}{lrrrrrr}&\text { A}&\text { B}&\text { C}&\text { D}\\\text { Grinding minutes per unit } & 3.80 & 5.30& 4.30 & 3.40 \\\text { Selling price per unit } & \$ 76.1 0 & \$ 93.50 & \$ 87.40& \$ 104.20 \\\text { Variable selling cost per } & \$ 2.20 & \$ 1.20& \$ 3.30& \$ 1.60 \\\text { unit } & \\\text { Monthly demand in units }& 2,000 & 4,000 & 3,00 0 & 2,000\end{array}$

The grinding machines are the constraint in the production facility. A total of 53,600 minutes is available per month on these machines.
Direct labor is a variable cost in this company.
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How many minutes of grinding machine time would be required to satisfy demand for all four products?

• A) 56,100
• B) 40,900
• C) 53,600
• D) 13,000

Acknowledge the significance of working capital and current ratios in financial analysis.

Recognize essential components of the accounting system.

Prepare and understand the purpose of the adjusted trial balance and its role in financial statements' preparation.

Identify the sequence of financial statement preparation.

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Definitions:

Overhead Volume Variance

The difference between the budgeted manufacturing overhead for the actual production volume and the actual manufacturing overhead incurred.

Two-Variance Analysis

An analytical technique in managerial accounting where variances between expected and actual performance are divided into a volume variance and a rate or efficiency variance.

Overhead Controllable

Expenses incurred in the running of a business that management can directly influence or control, such as supplies and advertising.

Overhead Volume

Overhead Volume refers to the level of overhead costs that correlate with the level of production or activity in a company.