Ch 10 P10-5a Edgerron Company is able to produce two products, G and B, with the

Question

Ch 10 P10-5a Edgerron Company is able to produce two products, G and B, with the same machine following information is available. Product GProduct Selling price per unit Variable costs per unit $ 70 20 $ 100 60 Contribution margin per unit $ 50 S 40 Machine hours to produce 1 unit Maximum unit sales per month 0.4 hours 600 units 1.0 hours 200 units The company presently operates the machine for a sin gle eight-hour shift for 22 working days Management is thinking about operating the machine for two shifts, which will increase its p another eight hours per day for 22 days per month. This change would require $5,000 addition per month. (Round hours per unit answers to 1 decimal place. Enter operating losses negative values.) 1. Determine the contribution margin per machine hour that each product generates. Product G Proc Contribution margin per unit 50.00 $ Contribution margin per machine hour Product G Produ Maximum number of units to be sold 600 Hours required to produce maximum units 2. How many units of Product G and Product B should the company produce if it continues to operat How much total contribution margin does this mix produce each month? Product G Producti Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit 440 24

Explanation / Answer

Product g Product B Selling price per unit $70 $100 Variable Cost per unit 20 60 Contribution margin Per unt C 50 40 Machine hours to produce 1 unit H 0.4 1 Ans 1 Contribution Margin per hour C/H 125 40 Maximum sales 600 200 Hours required to produce maximum units 240 200 Ans 2 Product g Product B Total Hours dedicated to production of each product 176 0 176 Units contribution for most profitable mix 440 440 Contribution Margin per unit 50 50 Total Contribution margin-one shift 22000 22000 No. of hours available 22*8 176 Hours If doublr shift 22*8*2 352 Hours As maximum no. of available hour is 176 in single shift so 176/.4=440 units of Product G will be produced because it gives more contribution per hour Ans 3 Product g Product B Total Hours dedicated to production of each product 240 112 352 Units contribution for most profitable mix 600 112 712 Contribution Margin per unit 50 40 90 Total Contribution margin-two shift 30000 4480 34480 Less: Additional Fixed cost -5000 Total after additional fixed cost expenses 29480 Yes should go for double shift 29480 Increase in Income by 29480-22000 7480 Now 352 hours available in double shift Product G-Maximum sales 600 units Hours required 600*.4 240 Hours Left 352-240 112 Units of product B to be produced as 1 hr per unit 112 Ans 4 For additional 100units there will b expenses of $4000 Ans 3 Product g Product B Total Hours dedicated to production of each product 280 72 352 Units contribution for most profitable mix 700 72 772 Contribution Margin per unit 50 40 90 Total Contribution margin-two shift 35000 2880 37880 Less: additional Fixed Cost -5000 Less :Marketing expenses -4000 Total Contribution margin after marketing expenses and additional fixed cost 28880 No it should not go for this oprtion As decrease in income by (29480-28880) -600

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.