A) Food Processors Espresso Machines Sales price $125 $225 Variable costs $50 $1

Question

A) Food Processors Espresso Machines

Sales price $125 $225

Variable costs $50 $150

The company can manufacture two word processors per machine hour and three espresso machines per machine hour. The company's production capacity is 1,200 machine hours per month.

What is the contribution margin per machine hour for espresso machines?

B) For the most recent year, Robin company reports operating income of $650,000. Robin's sales margin is 10% and capital turnover is 2.0.

What is Robin's return on investment (ROI)?

Explanation / Answer

COnt pu for Espresso = 225-150 = 75

As One machine hr gives 3 espresso, COnt per Mach hr for espresso = 3*75 = $225 .........Ans (A)

ROI = Sales Margin* Capital Turnover

= 10%*2.0 = 20% .....Ans (B)

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