Return to Blackboard Davis, Managerial Accounting, 3e & Practice Gradebook ORION

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Return to Blackboard Davis, Managerial Accounting, 3e & Practice Gradebook ORION Downloadable eTextbook Assignment CALCULATOR PRINTER VERSION RCES Exercise 8-12 Crane, Inc. produces three types of balloons-small, medium, and large-with the following characteristics: Small Medium Large $8 $10 Selling price per unit Variable cost per unit Contribution margin per unit Machine hours per unit $5 $2 $3 2.4 1,030 $4 study Demand in units 500 880 The company has only 2,000 machine hours available each month How many units of each type of balloon should the company make to maximize its total contribution margin? (Round answers to O decimal places, eg. $,27s i ) Units Smal Medium Large Click if you would like to Show Work for this question QnShow Work SAVE POR LATER Question Attempts:0of 5 used /shared/ass leyplus.com EPIC 6

Explanation / Answer

Balloons to be make to maximise

Contribution

Hours used

500 units

500 hours

500 units  

1500 hours

Maximum total contribution = small - 500units x $1+ large - 500units x$4 =$ 2,500

Small medium large Contribution per unit $2 $3 $4 Machine hour per unit 1 2.4 3 Contribution per machine hour $2 $1.25 $1.33 Ranking I III II

Balloons to be make to maximise

Contribution

Hours used

500 units

500 hours

500 units  

1500 hours

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