ZapaKing Limited is a manufacturing company that makes three kinds of products. The company is undergoing financial difficulties and the management have decided to scrap one of its product lines. The monthly manufacturing costs of 1,000 units for each of the product lines is given below. ZapaKing's selling prices for each of its products are: Product X= $97; Product Y= $91; Product Z= $87.50. Product X ($) Product Y ($) Product Z ($) Direct materials cost 50,000 40,000 35,000 Direct labor cost 20,000 25,000 30,000 Variable overhead 15,000 10,000 8,000 Fixed overhead 5,000 6,000 3,500 a)What is the unit cost for each of the product lines? b)What is the profit per unit for each product line? c)What is the contribution margin per unit of each of the three product lines? d)Discuss what product line should be scrapped from ZapaKing's manufacturing lines?

ZapaKing Limited is a manufacturing company that makes three kinds of products. The company is undergoing financial difficulties and the management have decided to scrap one of its product lines. The monthly manufacturing costs of 1,000 units for each of the product lines is given below. ZapaKing's selling prices for each of its products are: Product X= $97; Product Y= $91; Product Z= $87.50. Product X ($) Product Y ($) Product Z ($) Direct materials cost 50,000 40,000 35,000 Direct labor cost 20,000 25,000 30,000 Variable overhead 15,000 10,000 8,000 Fixed overhead 5,000 6,000 3,500 a)What is the unit cost for each of the product lines? b)What is the profit per unit for each product line? c)What is the contribution margin per unit of each of the three product lines? d)Discuss what product line should be scrapped from ZapaKing's manufacturing lines?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 54P

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