Direct labor Overhead 30,200 27,500 The revenues from each product are as follows: sirloin roasts, $78,500; chops, $76,000; spare ribs, $32,000; and residual, $8,600. Carleigh's management has learned that certain organ meats are a prized delicacy in Asia. They are considering separating those from the residual and selling them abroad for $55,800. This would bring the value of the residual down to $2,150. In addition, the organ meats would need to be packaged and then air freighted to Asia. Further processing cost per week is estimated to be $27,700 (the cost of renting additional packaging equipment, purchasing materials, and hiring additional direct labor). Transportation cost would be $10,600 per week. Finally, resource spending would need to be expanded for other activities as well (purchasing, receiving, and internal shipping). The increase in resource spending for these activities is estimated to be $3,000 per week. Required: 1. What is the gross profit earned by the original mix of products for one week? X 2. Should the company separate the organ meats for shipment overseas or continue to sell them at split-off? Separate the organ meats for shipment overseas ✓ What is the effect of the decision on weekly gross profit? Increase by $ X
Direct labor Overhead 30,200 27,500 The revenues from each product are as follows: sirloin roasts, $78,500; chops, $76,000; spare ribs, $32,000; and residual, $8,600. Carleigh's management has learned that certain organ meats are a prized delicacy in Asia. They are considering separating those from the residual and selling them abroad for $55,800. This would bring the value of the residual down to $2,150. In addition, the organ meats would need to be packaged and then air freighted to Asia. Further processing cost per week is estimated to be $27,700 (the cost of renting additional packaging equipment, purchasing materials, and hiring additional direct labor). Transportation cost would be $10,600 per week. Finally, resource spending would need to be expanded for other activities as well (purchasing, receiving, and internal shipping). The increase in resource spending for these activities is estimated to be $3,000 per week. Required: 1. What is the gross profit earned by the original mix of products for one week? X 2. Should the company separate the organ meats for shipment overseas or continue to sell them at split-off? Separate the organ meats for shipment overseas ✓ What is the effect of the decision on weekly gross profit? Increase by $ X
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter17: Activity Resource Usage Model And Tactical Decision Making
Section: Chapter Questions
Problem 13E: Carleigh, Inc., is a pork processor. Its plants, located in the Midwest, produce several products...
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