d. $13.00 Explanation: The contribution margin formula is determined by subtracting variable costs from the selling price. Here, the sales price is $25 per unit while the variable costs consist of: Direct materials: $6.20, Direct labor: $2.80, variable overhead: $1.45, sales commissions: $1.00, and administrative variable expense: $0.55 totaling a variable cost of $12.00 per unit. Thus, $25 selling price per unit minus $12 variable cost per unit equals $13 contribution margin per unit, the amount each unit contributes to cover fixed costs and generate profit during the period.
Answer:
a) Kate will yield 100 tomatoes and no heads of lettuce.
b) Jim will yield 0 tomatoes and 180 heads of lettuce.
Explanation:
Due to better climatic conditions for growing tomatoes at Kate's plot, she should prioritize those for superior quality. Additionally, her lettuce yield per square foot is lower than Jim's (3 heads compared to his 6). This means Kate could cultivate 60 heads and Jim could produce 120 heads of lettuce on 20 square feet (double). Thus, she should skip lettuce cultivation due to both quality and quantity considerations.
The same reasoning applies to Jim's tomato production. If he grows tomatoes, he’ll only manage 60 at a 20-square-foot plot, in contrast to Kate's 100. Therefore, he should refrain from growing tomatoes.
Explanation provided below.
Response:
The answer to the question is provided below.
Analysis:
(a) What quantities of peanut butter and jelly will David purchase with his $3 weekly allowance?
It is stated that David prefers 2 ounces of peanut butter for each ounce of jelly, thus
2Pb = J, and the budget constraint can be expressed as 0.05Pb + 0.1J = 3.
Using substitution,
David will acquire Pb = 30 ounces, J = 15 ounces.
30(0.05) + 15(0.10) = 3
(b) If the cost of jelly rises to $0.15 per ounce, what quantities of each item would he purchase?
If pj = $0.15,
24(0.05) + 12(0.15) = 3
Using substitution, we find J = 12 ounces, Pb = 24 ounces.
