If this segment is eliminated what will be the effect on

Reference no: EM13613706

1.Mendosa Company produces three products. All the products use a furnace operation, which has a maximum number of 10,000 hours available for production of all three products. The following information is available:

Product 1 Product 2 Product 3

Unit demand monthly 1,000 1,500 1,000

Per unit information:

Sales $35.00 $33.00 $29.00
Variable Costs 15.00 15.00 15.00
Furnace hours 4 3 2

From a profitability perspective, what order of production and amount would maximize profit?

a. Mendosa should produce the three products in the following order and

amount: Product 1: 1,000 units, then
Product 2: 1,500 units, then
Product 3: 750 units

b. Mendosa should produce the three products in the following order and amount: Product 3: 1,000 units, then

Product 2: 1,500 units, then
Product 1: 875 units

c. Mendosa should produce the three products in the following order and amount: Product 1: 1,000 units, then

Product 2: 1,500 units, then
Product 3: 1,000 units

d. Mendosa should produce the three products in the following order and amount: Product 2: 1,500 units, then

Product 1: 1,000 units, then
Product 3: 750 units

2.A segment of Hazard Inc. has the following data.

Sales $200,000
Variable expense $140,000
Fixed expenses $100,000

If this segment is eliminated, what will be the effect on the remaining company? Assume that 50% of the fixed expenses will be eliminated and the rest will be allocated to the segments of the remaining company.

a. $120,000 increase.

b. $10,000 decrease.

c. $50,000 increase.

d. $10,000 increase.

Reference no: EM13613706

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