Edge Company produces two models of its product with the same machine. The machine has a capacity of 154 hours per month. The following Information is available. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit 1. Determine the contribution margin per machine hour for each model. Product Contribution Margin Contribution margin per machine hour Standard $ 140 55 $85 Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin 1 hour 500 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin Deluxe $ 170 102 $68 2 hours 200 units Standard 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total Deluxe 3. Assume the maximum demand for the Standard model is 80 units (not 500 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total
Edge Company produces two models of its product with the same machine. The machine has a capacity of 154 hours per month. The following Information is available. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit 1. Determine the contribution margin per machine hour for each model. Product Contribution Margin Contribution margin per machine hour Standard $ 140 55 $85 Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin 1 hour 500 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin Deluxe $ 170 102 $68 2 hours 200 units Standard 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total Deluxe 3. Assume the maximum demand for the Standard model is 80 units (not 500 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...
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