The Bubble Company produces a variety of bottles from recycled plastic. The company has one particular machine

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The Bubble Company produces a variety of bottles from recycled plastic. The company has one particular machine on which it can produce either of two types of water bottles, 1-liter bottles or 1/2-liter bottles. Sales demand for both products is such that the machine could operate at full capacity on either of the products, and Bubble can sell all output at current prices. One unit of the 1/2-liter product requires one hour of machine time per unit of output and one unit of the 1-liter bottle requires two hours of machine time. Each "unit" is a box that contains 150 bottles. Following are the costs per unit for the bottles:


The Bubble Company produces a variety of bottles from recycled


a. This item is a variable cost because it is based on machine usage.
b. This item is a fixed cost because it is unaffected by the usage of the machine.

All other costs are the same whether Bubble produces 1-liter bottles, 1/2-liter bottles, or both, so you may ignore them.

Required
Should Bubble produce 1-liter bottles, 1/2-liter bottles, orboth?

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Related Book For  book-img-for-question

Fundamentals of Cost Accounting

ISBN: 978-0078025525

4th edition

Authors: William Lanen, Shannon Anderson, Michael Maher

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