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Sammamish Brick, Inc., manufactures bricks using clay deposits on the company's property. Raw clays are blended and then extruded into molds to form unfired bricks. The unfired bricks are then stacked onto movable metal platforms and rolled into the kiln where they are fired until dry. The dried bricks are then packaged and shipped to retail outlets and contractors. The bottleneck in the production process is the kiln, which is available for 2,200 hours per year. Data concerning the company's four main products appear below. Products are sold by the pallet. Gross revenue per pallet Contribution margin per pallet Annual demand (pallets) Hours required in the kiln per pallet Traditional Brick $769 $480 75 10 Textured Facing $1,331 $ 620 95 10 Cinder Block $608 $388 85 4 Roman Brick $886 $455 150 No fixed costs could be avoided by modifying how much is produced of any product. Required: la. Calculate the total hours required in the kiln to satisfy demand for all products. Traditional Textured Cinder Roman Total Brick Facing Block Brick Total hours required in the drying kiln 1b. Is there sufficient capacity in the kiln to satisfy demand for all products? O Yes O No 2a. Calculate the profitability index for the company's four products. . Traditional Textured Cinder Roman Brick Facing Block Brick

Sammamish Brick, Inc., manufactures bricks using clay deposits on the company's property. Raw clays are blended and then extruded into molds to form unfired bricks. The unfired bricks are then stacked onto movable metal platforms and rolled into the kiln where they are fired until dry. The dried bricks are then packaged and shipped to retail outlets and contractors. The bottleneck in the production process is the kiln, which is available for 2,200 hours per year. Data concerning the company's four main products appear below. Products are sold by the pallet. Gross revenue per pallet Contribution margin per pallet Annual demand (pallets) Hours required in the kiln per pallet Traditional Brick $769 $480 75 10 Textured Facing $1,331 $ 620 95 10 Cinder Block $608 $388 85 4 Roman Brick $886 $455 150 No fixed costs could be avoided by modifying how much is produced of any product. Required: la. Calculate the total hours required in the kiln to satisfy demand for all products. Traditional Textured Cinder Roman Total Brick Facing Block Brick Total hours required in the drying kiln 1b. Is there sufficient capacity in the kiln to satisfy demand for all products? O Yes O No 2a. Calculate the profitability index for the company's four products. . Traditional Textured Cinder Roman Brick Facing Block Brick

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter6: Process Costing
Section: Chapter Questions
Problem 38P: Healthway uses a process-costing system to compute the unit costs of the minerals that it produces....
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Sammamish Brick, Inc., manufactures bricks using clay deposits on the company's property. Raw clays are blended and then extruded into molds to form unfired bricks. The unfired bricks are then stacked onto movable metal platforms and rolled into the kiln where they are fired until dry. The dried bricks are then packaged and shipped to retail outlets and contractors. The bottleneck in the production process is the kiln, which is available for 2,200 hours per year. Data concerning the company's four main products appear below. Products are sold by the pallet. Gross revenue per pallet Contribution margin per pallet Annual demand (pallets) Hours required in the kiln per pallet Traditional Brick $769 $480 75 10 Textured Facing $1,331 $ 620 Cinder Block $608 $388 85 4 Roman Brick $886 $455 95 10 150 No fixed costs could be avoided by modifying how much is produced of any product. Required: 1a. Calculate the total hours required in the kiln to satisfy demand for all products. Traditional Textured Cinder Roman Total Brick Facing Block Brick Total hours required in the drying kiln 1b. Is there sufficient capacity in the kiln to satisfy demand for all products? O Yes O No 2a. Calculate the profitability index for the company's four products. Traditional Textured Cinder Roman Brick Facing Block Brick
Transcribed Image Text:Sammamish Brick, Inc., manufactures bricks using clay deposits on the company's property. Raw clays are blended and then extruded into molds to form unfired bricks. The unfired bricks are then stacked onto movable metal platforms and rolled into the kiln where they are fired until dry. The dried bricks are then packaged and shipped to retail outlets and contractors. The bottleneck in the production process is the kiln, which is available for 2,200 hours per year. Data concerning the company's four main products appear below. Products are sold by the pallet. Gross revenue per pallet Contribution margin per pallet Annual demand (pallets) Hours required in the kiln per pallet Traditional Brick $769 $480 75 10 Textured Facing $1,331 $ 620 Cinder Block $608 $388 85 4 Roman Brick $886 $455 95 10 150 No fixed costs could be avoided by modifying how much is produced of any product. Required: 1a. Calculate the total hours required in the kiln to satisfy demand for all products. Traditional Textured Cinder Roman Total Brick Facing Block Brick Total hours required in the drying kiln 1b. Is there sufficient capacity in the kiln to satisfy demand for all products? O Yes O No 2a. Calculate the profitability index for the company's four products. Traditional Textured Cinder Roman Brick Facing Block Brick
2b. What is the production plan for the year that would maximize the company's profit? (Round answer to the nearest complete pallet (i.e., 12.3 pallets should be entered as 12.) pallets pallets pallets pallets 3. What would be the total contribution margin for the production plan you have proposed? Traditional Textured Cinder Roman Brick Facing Block Brick Total 4. The kiln could be operated for more than 2,200 hours per year by running it after normal working hours. Up to how much per hour should the company be willing to pay in overtime wages, energy costs, and other incremental costs to operate the kiln additional hours? Maximum amount to operate the kiln per hour
Transcribed Image Text:2b. What is the production plan for the year that would maximize the company's profit? (Round answer to the nearest complete pallet (i.e., 12.3 pallets should be entered as 12.) pallets pallets pallets pallets 3. What would be the total contribution margin for the production plan you have proposed? Traditional Textured Cinder Roman Brick Facing Block Brick Total 4. The kiln could be operated for more than 2,200 hours per year by running it after normal working hours. Up to how much per hour should the company be willing to pay in overtime wages, energy costs, and other incremental costs to operate the kiln additional hours? Maximum amount to operate the kiln per hour
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