dge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per month. The following information is available. Standard Deluxe Selling price per unit $ 190 $ 220 Variable costs per unit 80 132 Contribution margin per unit $ 110 $ 88 Machine hours per unit 1 hour 2 hours Maximum unit sales per month 550 units 200 units Required:
dge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per month. The following information is available. Standard Deluxe Selling price per unit $ 190 $ 220 Variable costs per unit 80 132 Contribution margin per unit $ 110 $ 88 Machine hours per unit 1 hour 2 hours Maximum unit sales per month 550 units 200 units Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Edge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per month. The following information is available.
| Standard | Deluxe | |||
|---|---|---|---|---|
| Selling price per unit | $ 190 | $ 220 | ||
| Variable costs per unit | 80 | 132 | ||
| Contribution margin per unit | $ 110 | $ 88 | ||
| Machine hours per unit | 1 | hour | 2 | hours |
| Maximum unit sales per month | 550 | units | 200 | units |
Required:
Transcribed Image Text:1. Determine the contribution margin per machine hour for each model.
Product Contribution Margin
Contribution margin per unit
Contribution margin per machine hour
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin
Standard
2. How many units of each model should the company produce? How much total contribution margin does this mix
produce per month?
Hours dedicated to the oduction each duct
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin
Deluxe
Standard
Deluxe
3. Assume the maximum demand for the Standard model is 80 units (not 550 units). How many units of each model should
the company produce? How much total contribution margin does this mix produce per month?
Standard
Total
Deluxe
Total
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