The phoenix plant of baldo chemical processes alphazine

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Reference no: EM13134679

a.The Phoenix plant of Baldo Chemical processes alphazine into betazine and gammazine. A batch consists of 20,000 gallons of alphazine, costing $11,000. Processing costs are $52,000, and results in 14,000 gallons of betazine and 6,000 gallons of gammazine. Raw material and processing costs are allocated to the two products based on number of gallons. Betazine can be sold for $15/gallon. Gammazine can be sold for $9/gallon, or it can be processed into deltazine. Deltazine can be sold for $12/gallon. Additional processing costs for a batch of deltazine are $15,500. Should Baldo sell gammazine or deltazine? Explain.

b. Munchkin Company produces two products, X and Y, with unit data as follows:
X Y
Selling price $140 $200
Prime costs 60 85
Overhead (70% fixed) 40 50

Machine hours 2 3

Munchkin currently has insufficient machine hours to meet demand for its products. Which product, X or Y, should receive priority in production, and why?

Reference no: EM13134679

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