Find what is the maximum company should be willing to pay

Assignment Help Managerial Accounting
Reference no: EM132520182

Wondrous Aromas Company has three lines of perfume: Red, Green, and Blue. After megacelebrity Caitlyn Spencer tweeted that this was her favourite line of perfume, demand for all three products has been off the charts. The company has a problem, it has a limited supply of orchid nectar, a common ingredient in all three products. Orchid nectar costs $5 per gram and is the major selling feature of all three perfumes. Cost data follow: Red Green Blue Price $200 $160 $80 Variable expenses Orchid nectar 50 30 20 Other direct materials 15 25 15 Direct labour 20 25 10 Variable manufacturing overhead 15 10 10 Total variable cost 100 90 55 Contribution margin $100 $70 $25

Required

Question a.) Which product would you recommend the company focus on producing first? Second? Third?

 

Question b.) A supplier emerges willing to provide the company with more orchid nectar, but for a major premium. What is the maximum the company should be willing to pay per gram of orchid nectar as long as there is unfilled demand for all three perfumes?

Reference no: EM132520182

Questions Cloud

Adaptive way for male and female beetles : Which of the following represents the most adaptive way for male and female beetles to find each other for mating??
Study populations that surveys and interviews : Focus groups are an excellent way to study populations that surveys and interviews can't as effectively reach.
What results show regarding the business performance : Based on these explanations did the company have a good or bad year? Explain what each of these results show regarding the business's performance
Describe buying on margin : Describe buying on margin. Why is it illegal to trade on insider information? What is a short sale?
Find what is the maximum company should be willing to pay : Find What is the maximum the company should be willing to pay per gram of orchid nectar as long as there is unfilled demand for all three perfumes?
How can the nurse offer support to the mother : How might the cultural, spiritual, and/or philosophical background of the mother, family, and community inform the mother's reaction? How can the nurse offer.
How much has accumulated : Kimberly Ford invested $10,000 10 years ago at 16 percent, compounded quarterly. How much has she accumulated? Provide the suitable examples.
Describe the healthcare issue or opportunity you selected : Describe the healthcare issue or opportunity you selected. Describe the stakeholder groups impacted by this issue/opportunity.
What is cash budget for march and april and may : What is cash budget for March, April, and May. Seventy percent of the firm's sales are on credit. Past experience shows that 40 percent

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Is noailles being unfairly penalised if she implements jit

Is Noailles being unfairly penalised if she implements JIT? What should Noailles do? What should Eluard do? Is Noailles correct in characterising some of the financial benefits as 'soft'?

  What price should you pay for the preference share

What price should you pay for the preference share if you are expecting a return of 10 per cent?- What maximum price should you pay for the preference share?

  For what purpose were these funds used

Why do most companies, including Warehouse Foods, typically have negative cash flows from investing activities?

  Prepare a production cost report for the month of august

Prepare a production cost report for the month of August.

  Determining cost systems-tioga company

Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is not preparing its annual profit plan.

  Difference between hard and soft risk management benefits

What are the benefits of risk management? What is the difference between hard and soft risk management benefits? Why would an organization choose one risk management benefit over another?

  Allocation of any underapplied or overapplied overhead

Allocation of any underapplied or overapplied overhead for the month is closest to - cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

  Find a franchisee breakeven sales in dollars

BUSAC 187-5651 RESEARCH PROJECT 2. Owner Li Soo is considering franchising her Happy Noodles restaurant concept. Find a franchisee's breakeven sales in dollars

  Models and concepts affecting the pricing decisions

The models and concepts affecting the pricing decisions taken by organisations, critically reflecting upon their usefulness (maximum mark 33%).

  What total cost of beginning inventory for direct materials

What is the total cost of the beginning inventory for direct materials? Zee Corporation had 3600 units one-third completed at the beginning of the period

  Why you would consider contributing capital to the hospital

Discuss any information that has not been presented to you that you would find useful - Discuss three (3) reasons why you would consider contributing capital

  How much will grandlin gears record

How much will Grandlin Gears record as a debit to Manufacturing Overhead during the year - During the month of August, Grandlin Gears applied overhead

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd