Solution:
a1)
The conatiner division profits (1.71 million cases) | |
Revenue | $12,141,000 |
Less: Cost | ($10,717,000) |
profit | $1,424,000 |
a2)
The mixing division profits (1.71 million cases) | |
Revenue | $28,557,000 |
Less: Cost ($12,141,000+$3,570,000) | ($15,711,000) |
profit | $12,846,000 |
a3)
The corporation profits (1.71 million cases) | |
Revenue | $28,557,000 |
Less: Cost ($10,717,000+$3,570,000) | ($14,287,000) |
profit | $14,270,000 |
b1)
Container divisions:
Cases | 570,000 | 1,141,000 | 1,710,000 |
Revenue | $5,073,000 | $9,006,000 | $12,141,000 |
Less: Cost | ($4,219,000) | ($7,468,000) | ($10,717,000) |
profits | $854,000 | $1,538,000 | $1,424,000 |
Most profitable volume of production for container = 1,141,000 cases
b2)
Mixing division:
Cases | 570,000 | 1,141,000 | 1,710,000 |
Revenue | $12,369,000 | $22,458,000 | $28,557,000 |
less: Cost |
$7,043,000 ($1,970,000+$5,073,000) |
$11,776,000 ($2,770,000+$9,006,000) |
$15,711,000 ($3,570,000+$12,141,000) |
profits | $5,326,000 | $10,682,000 | $12,846,000 |
Most profitable volume of production for mixing division =1,710,000
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