Keychain Publishing Is Planning to Release Two Books, Simultaneously, by the Same

question 22

Essay

Keychain Publishing is planning to release two books, simultaneously, by the same author. One is a fictional book, while the other is the author's autobiography. The details of its cost, production, and demand are given in the table below. $\begin{array}{|l|l|l|}\hline \text { Keychain Pub lishing } & & \\\hline & & \\\hline \text { Data } & & \\\hline & \text { Fictional } & \text { Autobiography } \\\hline \text { Cost/book } & \$ 1.75 & \$ 1.50 \\\hline \text { Price/book } & \$ 11.49 & \$ 9.86 \\\hline & & \\\hline \text { Base demand } & 50,000 & 65,000 \\\hline \text { Increase/\$1 Adv. } & 25 & 35 \\\hline \text { Min. percent } & & \\\text { requirement } & 35 \% \\\hline \text { Max. percent limitation } & 70 \% \\\hline & \\\hline \text { Total Budget } & \$ 150,000 \\\hline\end{array}$ Keychain Publishing has $150,000 available to bind books and advertise them with an objective of maximizing profit contribution. Provide the objective function for maximizing profits, along with its constraints.

Calculate the cost of goods manufactured and sold, including after the allocation of underapplied or overapplied manufacturing overhead.

Understand the calculation and interpretation of the cost of goods manufactured.

Understand the process for adjusting the cost of goods sold on the income statement.

Comprehend the allocation of underapplied or overapplied manufacturing overhead to inventory accounts and the cost of goods sold.

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Definitions:

Goods

Tangible products or merchandise that are produced, bought, and sold in the course of business operations.

Incidental Damages

Compensation for additional unexpected expenses that arise directly from a breach of contract, beyond the direct loss or damage incurred.

Breach

The violation or breaking of a legal obligation or agreement, which can result in legal action against the party that fails to honor their part of the contract.

Lessor

The party or entity that leases or rents property to another party, known as the lessee, under a lease agreement.