WileyPlus Problem 4-9 Drysen Corp. manufactures two styles of table lamps, Prada

Question

WileyPlus Problem 4-9 Drysen Corp. manufactures two styles of table lamps, Prada and Dolpha. The following data is available: Prada Dolpha $48 67 $34 $46 Selling price per unit Variable cost per unit Machine hours required Total fixed costs 1.4 $58,200 Drysen can sell a maximum of 11,900 units of each style of lamp. Machine hour capacity is 25,000 hours per year Z Your answer has been saved and sent for grading. See Gradebook for score details. Which lamp has the highest contribution margin per unit? The Dolpha lamp has the highest contribution margin per unit. Z Your answer has been saved and sent for grading. See Gradebook for score details. Which lamp has the highest contribution margin per hour? The Prada lamp has the highest contribution margin per hour. How many lamps of each style should be produced to maximize income, and what is the maximum income? (Round answers to 0 decimal places, e.g. 1250.) No. of lamps to be produced Prada units Dolpha units Maximum income

Explanation / Answer

Solution a:

The Dolpha lamp has the highest contribution margin per unit.

Solution b:

The Prada lamp has the highest contribution margin per hour.

Solution c:

Total machine hour available = 25000 hours

First hours will be utilize to produce maximum units of Prada

Total hours utilized in production of Prada = 11900 * 1.4 = 16660 hours

Remaining hours = 25000 - 16660 = 8340 hours

Nos of units to be produced for Dolpha lamp with available machine hours = 8340 / 3 = 2780 lamp

Total contribution margin to be earned = (11900*$14) + (2780*$21) = $224,980

Maximum income = $224,980 - $58,200 = $166,780

Computation of contribution margin per unit Particulars Prada Dolpha Selling price per unit $48.00 $67.00 Variable cost per unit $34.00 $46.00 Contribution margin per unit $14.00 $21.00

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