Q1) Sunny Hazel, the manager of cyber web services should decide whether to hire new employee or to outsource some of web design work to Ky to, freelance graphic designer. if she hires new employee, she will pay $32 per design hour for employee to work 600 hours and incur service overhead costs of $2 per design hour. If she outsources work to ky to, she will pay= $ 36 per design hour for 600 hours of work. She can also redirect use of computer and server to create $ 4000 in extra revenue from web page maintenance work. Must cyber web services hire new designer or outsource work to ky To?
Sales Mix Decision
EZ,Inc, produces two products which need both machine processing and labor operations. Though there is unlimited demand for both products, EZ could devote all its capacities to single product. Unit process, cost data and processing needs are:
| |
Product E |
product Z |
| Unit selling price |
$80 |
$220 |
| Unit variable costs |
$40 |
$90 |
| Machine hours per unit |
4 |
1.4 |
| Labor hours per unit |
2 |
6 |
Next year company will be limited to 160.000 machine hours and 120.000 labor hours. Fixed costs for year are $ 1000000.
1. Computer most profitable combination of products to be manufactured next year.
2. Create the income statement by using contribution margin format for product volume computed in 1.
Sell or process further Decision
Six start pizza produces frozen pizzas and calzones and sells them for $ 4 each. Six star is presently thinking of a proposal to produce and sell fully prepared products. Management has collected the following suitable information.
| Product |
sales revenue with no Additional processed |
sales revenue if processed further |
AdditionalProc
product costs |
| Pizza |
$4 |
$8 |
$5 |
| Calzone |
$4 |
$10 |
$5 |
Use incremental analysis to find out which products six star pizza must offer?