Please remember that this type of problem does not generally require extensive computations. If you are finding yourself doing lots of work, please try to step back and think carefully about what you really need to do. Problem 1. Deloras Dunnville Delights (DDD) is a pastry and candy firm. Three of its most popular items all contain a secret ingredient that makes those who consume them very happy with their purchase. Due to production issues of the supplier, it has become difficult to get the secret ingredient in the required quantities. The situation is expected to be resolved as of the first of January, but for the month of December, only 200,000 teaspoons of the special ingredient will be available to the firm.

Information for the three products follows:

Blue Brownies Lavender Fudge Red Velvet Cupcakes

Normal monthly capacity 23,000 32,000 45,000

Normal monthly demand 19,000 30,000 42,000

Selling price $4.75 $25.00 $15.00

DM $.40 $3.50 $1.20

DL .45 1.30 .85

VOH .12 1.05 .36

FOH 1.48 12.95 4.44

Total Cost $2.45 $18.80 6.85

DLH .25 .95 .35

MH .55 .85 .20

TSP of secret ingredient 1.45 5.45 2.60

1. In order to maximize net income for the month of December, how many units of each product should the firm produce?

Problem 2. Mama Kacina, Inc. makes the best pies in the world. Her pies are so popular that they are shipped all over the island. For 40 years, the firm has made its own crusts along with the delicious filling that goes in. Using an ABC system that Mamas nephew, who has an MBA, implemented, the cost of the crusts is:

DM $.25

DL .50

OH .75

Total Cost $1.50

The ABC system contains three cost pools. Costs are almost entirely fixed in all three cost pools.

Recently, a new supplier has been established by a local entrepreneur. The new firm has offered to make all the pie crusts Mama needs for $.80 each. Mama would save $.70 per pie.

Currently, Mama makes 1,500 pies per month. Her nephew tells her that her firm is operating at capacity. He suggests that buying the pies from the new supplier would allow them to increase the number of pies they sell by 100 per month. He says that would increase the firms contribution margin by $500 per month. Mama doesnt know what a contribution margin is, but she thinks doing things herself the way she always has is the best idea.

1. What would be the impact on net income of buying the pie crusts from the new supplier and producing more pies? You may assume that any pies Mama makes can be sold. Hi please provide me with a step-by-step solution for this relevant cost module exercise - highly appreciate it, will give you a rating if it is accurate. I would like to learn how it's done. Thank you so much!