Gunst Company produces three video games: Android, Bio-Mutant, and Cyclops. Cost
ID: 2557915 • Letter: G
Question
Gunst Company produces three video games: Android, Bio-Mutant, and Cyclops. Cost and revenue data pertaining to each product are as follows oid Mutant Bio- cyclops Selling price Direct labor Direct materials Variable overhead $125 60 16 $100 $64 48 24 7 At the present time, demand for each of the company's products far exceeds its capacity to produce them. Thus, management is trying to determine which of its games to concentrate on next week in filling its backlog of orders. Gunst's direct labor rate is $12 per hour, and only 1,000 hours of direct labor are available each week. Determine the maximum total contribution margin the company can make by its best use of the 1,000 available hours. (Do not round intermediate calculations.) Total contribution marginExplanation / Answer
Total contribution margin 48,000.00 Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Android Biomutant Cyclops Selling price per unit 100.00 64.00 125.00 Variable costs: per unit: Direct Labour 48.00 24.00 60.00 Direct materials 9.00 8.00 16.00 Variable overhead 7.00 4.00 9.00 Total variable cost per unit 64.00 36.00 85.00 Contribution margin per unit = SP - VC 36.00 28.00 40.00 Labour hour per unit = Labour per unit/12 0.75 0.67 1.33 Contribution per labour hour =Cont/Labour hour 48.00 42.00 30.00 Ranking 1.00 2.00 3.00 So the company should make android as contribution per hour is highest No of hours available 1,000.00 Contribution per hour of android 48.00 Maximum contribtuion margin = 48 * 1000 48,000.00 No of units of android = 1000/.75 1,333.33
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