Question

Managerial accounting, please show work for better understanding. Also having trouble with 3 and 4

The Kankakee Bakery produces three types of cakes: birthday, wedding, and special occasion. The cakes are made from scratch and baked in a special cake oven. During the holiday season, the two month period from November 1 through January 1, total demand for the cakes exceeds the capacity of the cake oven. The cake oven is available for baking 690 hours per month, but because of the size of the cakes, it can bake only one cake at a time. Management must determine how to ration the oven time among the three types of cakes. Information on costs, sales prices, and product demand are attached. Monthly fixed costs are $1,200 for fixed manufacturing overhead and $800 for fixed selling and administrative costs. REQUIRED: (1) (2) Calculate the contribution margin per cake for each type of cake. Show appropriate calculations. Calculate the contribution margin per hour of oven time for each cake. Show appropriate calculations. Round your answers for the hours per cake to three decimal places and the contribution margins per hour to three decimal places. Calculate the number of each type of cake that the bakery should produce each month during the holiday season in order to maximize the company's profit. Show appropriate calculations for your answers. Compute the total income before taxes that the company will earn for the period November 1 through January 1 based upon your answers to (3) above. Show appropriate calculations.

Answer 1

Answer is given below with working

1) Contribution analysis Birthday Cake Wedding Cake Special Occasion Cake $40.00 $25.00 $100.00 $5.00 Selling price Variable Cost Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling Total Variable Cost $30.00 $15.00 $5.00 $12.00 $62.00 $10.00 $8.00 $4.00 $5.00 $27.00 $3.00 $15.00 Contribution per unit $10.00 $38.00 $13.00 80 Required time minutes Required hours per unit 10 0.167 2) 1.333 0.300 Contribution per hour $60.000 $28.500 $43.333 Ranking Product mix calculation Total hours for 2 months 3) 1,380 Allotment Ranking wise Birthday Cake Special Occasion Cake Output 4,000 1,440 hours 666.67 432.00 1,098.67 281.33 Balance hours Wedding Cake(balance allotted) 281.33 hours 16,880 Balance hours calculation converted to minutes Minute per Wedding cake Total wedding cake 211.00 units Total Income through profitable mix Birthday Special Wedding Occasion Total Cake Cake Cake 4,000 211 1,440 $10.00 $38.00 $13.00 $40,000.00 $8,018.00 $18,720.00 $66,738.00 Product mix as calculated above Contribution per unit Total Contribution Less: Fixed Cost Fixed manufacturing overhead Selling and administrative costs $2,400.00 $1,600.00 Net profit $62,738.00