ct should be emphasized in the marketing and sales fitability? MBA 12-2 Contribu
ID: 2430754 • Letter: C
Question
ct should be emphasized in the marketing and sales fitability? MBA 12-2 Contribution margin per constraint e high demand. Thus, Nygard Glass is able to sell all e production process includes an autoclave operation, e autoclave is a production constraint. Total fixed 90,000. In addition, the following information is res three types of safety plate glass: mirror, laminated i gegular. All three products ha safety glass that it can make. Th he n is a press whis for the period are expected to be vailable for the three products: urized heat treatment. The is for the period are expected to be $ ad Regular Mirror $90 Laminated Unit selling price Unit variable cost Unit contribution margin Autoclave hours per unit Total process hours per unit $75 (65) $10 $60 (55) S 5 20 10,000 15 10,000 Budgeted units of production 10,000 y operating income for the budgeted units of production. b. Prepare an analysis showing which product is the most profitable per constraint hour.Explanation / Answer
Part a
Income Statement
Details
Units 10000
Units 10000
Units 10000
Total
Mirror
Laminated
Regular
Sales Revenue
$ 900,000.00
$ 750,000.00
$ 600,000.00
$ 2,250,000.00
Variable Cost
$ 720,000.00
$ 650,000.00
$ 550,000.00
$ 1,920,000.00
Contribution margin
$ 180,000.00
$ 100,000.00
$ 50,000.00
$ 330,000.00
Fixed Cost
$ 90,000.00
Net Operating Income
$ 240,000.00
Part b
Statement of Ranking
Mirror
Laminated
Regular
(A)
Contribution per unit
$ 18.00
$ 10.00
$ 5.00
(B)
Autoclave hours per Unit
$ 6.00
$ 4.00
$ 1.00
(C=A/B)
Contribution per Autoclave Hour
$ 3.00
$ 2.50
$ 5.00
Ranking
II
III
I
Product having Higher contribution per autoclave hour is most profitable per constraint hour.
Highest ranked product is produced first.
Regular safety plate glass is most profitable per constraint hour
Income Statement
Details
Units 10000
Units 10000
Units 10000
Total
Mirror
Laminated
Regular
Sales Revenue
$ 900,000.00
$ 750,000.00
$ 600,000.00
$ 2,250,000.00
Variable Cost
$ 720,000.00
$ 650,000.00
$ 550,000.00
$ 1,920,000.00
Contribution margin
$ 180,000.00
$ 100,000.00
$ 50,000.00
$ 330,000.00
Fixed Cost
$ 90,000.00
Net Operating Income
$ 240,000.00
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