Reference no: EM131213399
Product pricing and profit analysis with bottleneck operations
Palomar Chemical Company produces three products: ethylene, butane, and ester. Each of these products has high demand in the market, and Palomar Chemical is able to sell as much as it can produce of all three. The reaction operation is a bottleneck in the process and is running at 100% of capacity. Palomar Chemical wants to improve chemical operation profitability. The variable conversion cost is $20 per process hour. The fixed cost is $550,000. In addition, the cost analyst was able to determine the following information about the three products:
Ethylene Butane Ester
Budgeted units produced 15,000 15,000 15,000
Total process hours per unit 6 6 4
Reactor hours per unit 1.0 0.8 0.5
Unit selling price $400 $350 $250
Direct materials cost per unit $180 $130 $90
The reaction operation is part of the total process for each of these three products. Thus, for example, 1.0 of the 6 hours required to process ethylene are associated with the reactor.
Instructions
1. Determine the unit contribution margin for each of the three products.
2. Provide an analysis to determine the relative product profitabilities, assuming that the reactor is a bottleneck.
3. Assume that management wishes to improve profitability by increasing prices on selected products. At what price would ethylene and butane need to be offered in order to produce the same relative profitability as ester?
|
Do you think that inadequate strategic planning was a factor
: Write a brief report that outlines the reasons (both internal and external) fr Burgmasters dismise, and whether operations managmenet played a significant role in the demise. Do you think that inadequate strategic planning was a factor that resulte..
|
|
What is the maximum voltage that can be applied across
: The following 1/4 W resistors are in series: 1.2 k Ω, 2.2 k Ω, 3.9 k Ω, and 5.6 k Ω. What is the maximum voltage that can be applied across the series resistors without exceeding a power rating? Which resistor will burn out first if excessive volt..
|
|
Purpose of storing data in a program in an organized way
: Almost all programs need data to operate, and the data must be stored somewhere. Data structures serve the purpose of storing data in a program in an organized way.
|
|
How much voltage is dropped across the fifth resistor
: Five resistors are in series with a 20 V source. The voltage drops across four of the resistors are 1.5 V, 5.5 V, 3 V, and 6 V. How much voltage is dropped across the fifth resistor?
|
|
Product pricing-profit analysis with bottleneck operations
: Palomar Chemical Company produces three products: ethylene, butane, and ester. Each of these products has high demand in the market, and Palomar Chemical is able to sell as much as it can produce of all three. The reaction operation is a bottleneck i..
|
|
What is the value of the source voltage
: The following voltage drops are measured across three resistors in series: 5.5 V, 8.2 V, and 12.3 V. What is the value of the source voltage to which these resistors are connected?
|
|
How leader intended to deal with foreign policy and banking
: Using quotes from both speeches, tell how each leader intended to deal with Unemployment, Banking, finance and in general, the economy, Agriculture and Foreign Policy.
|
|
What is swimkids margin of safety
: Swimkids is a swimsuit manufacturer. They sell swim suits at a selling price is $30 per unit. Swimkids variable costs are $18 per unit. Fixed costs are $85,000. Swimkids expects sales of $279,800 next year. What is Swimkids's margin of safety?
|
|
What are cross-border mergers
: Cross-border mergers are a useful means of overseas expansion for multinational enterprises (MNEs). What are cross-border mergers? What are the circumstances under which MNEs internationalise using cross-border mergers
|