Edgerron Company is able to produce two products, G and B, with the same machine

Question

Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available Selling price per unit Variable costs per unit Product G $ 210 90 ProductB $ 240 144 Contribution margin per unit 120 $ 96 Machine hours to produce 1 unit Maximum unit sales per month 0.4 hours 650 units 1 hours 250 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $12,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place.)

Explanation / Answer

1. Contribution per machine hour:

2. Single shift and most profitable sales mix:

3. Double shift:

the company should go with the double shift as it increase the contribuition.

4. Double shift with strategy of 700 units of Product G.

The company do not pursue the strategy as it reduced the contribution .

Product G Product B Contribution margin per unit $120 $96 Contribution margin per machine hour $300 $96 maximum number of units to be sold 650 250 Hours required to produce the maximum units 260 hours 250 hours 510 hours

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

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