- Salt Company has 6,000 machine hours available to produceeither Product 1 or Product 2. The cost accounting departmentdeveloped the following unit information for each product:
| Product 1 | Product 2 |
Sales Price | $35 | $48 |
Direct Materials | 8 | 12 |
Direct Labor | 4 | 3 |
V. Manu O/H | 7 | 5 |
F. Manu O/H | 4 | 1 |
Machine Time Required | 15 minutes | 60 minutes |
To satisfy current customer orders, Salt Company must produce atleast 800 units of each product. Determine how Salt Company shoulduse the 6,000 machine hours to maximize income and satisfy customerexpectations
Chapter 7
- What role does the salvage value for a piece of old equipmentplay in a decision to retain or replace equipment?
- It is relevant because it reduces the loss on the sale of theold equipment
- It is relevant because it increases the cost of the newequipment
- It is relevant because it reduces the cost of the newequipment
