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Problem 10-3A (Algo) Sales mix strategies LO P3 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. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit Machine hours per unit Contribution margin per machine hour Standard 1. Determine the contribution margin per machine hour for each model. Product Contribution Margin Hours dedicated to the production of each product Units produced for most profitable sales mi Contribution margin per unit Total contribution margin $ 190 80 $ 110 1 hour 550 unite Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin S Deluxe $ 220 132 $ 88 $ 2 hours 200 units Standard 110 S Standard 110 $ 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Deluxe 164 164 110 18,040 $ Deluxe 88 44 Deluxe 0 88 Total 164 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 $ 18,040

Problem 10-3A (Algo) Sales mix strategies LO P3 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. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit Machine hours per unit Contribution margin per machine hour Standard 1. Determine the contribution margin per machine hour for each model. Product Contribution Margin Hours dedicated to the production of each product Units produced for most profitable sales mi Contribution margin per unit Total contribution margin $ 190 80 $ 110 1 hour 550 unite Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin S Deluxe $ 220 132 $ 88 $ 2 hours 200 units Standard 110 S Standard 110 $ 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Deluxe 164 164 110 18,040 $ Deluxe 88 44 Deluxe 0 88 Total 164 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 $ 18,040

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 17E: Product cost method of product costing Smart Stream Inc. uses the product cost method of applying...
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Problem 10-3A (Algo) Sales mix strategies LO P3 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. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit Machine hours per unit Contribution margin per machine hour 1. Determine the contribution margin per machine hour for each model. Product Contribution Margin Hours dedicated to the production of each product Units produced for most profitable sales mix Standard $ 190 80 $ 110 Contribution margin per unit Total contribution margin 1 hour 550 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin $ $ Deluxe $ 220 132 $88 $ 2 hours 200 units Standard 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Total 110 S 1 110 $ Standard Deluxe 164 164 110 18,040 S Deluxe 88 2 44 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 0 0 88 0 $ 18,040 164 Total
Transcribed Image Text:Problem 10-3A (Algo) Sales mix strategies LO P3 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. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit Machine hours per unit Contribution margin per machine hour 1. Determine the contribution margin per machine hour for each model. Product Contribution Margin Hours dedicated to the production of each product Units produced for most profitable sales mix Standard $ 190 80 $ 110 Contribution margin per unit Total contribution margin 1 hour 550 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin $ $ Deluxe $ 220 132 $88 $ 2 hours 200 units Standard 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Total 110 S 1 110 $ Standard Deluxe 164 164 110 18,040 S Deluxe 88 2 44 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 0 0 88 0 $ 18,040 164 Total
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