. A company produces two kinds of hammers: one with longer handles and one with shorter handles. The longer hammer uses better materials and has a better design for back support. During the past year, 200,000 shorter hammers and 50,000 longer hammers were produced and sold. Fixed costs amount to $500,000. If the shorter hammers were dropped from production, $180,000 of the fixed costs would be avoided. If the longer hammers were dropped, $90,000 of the fixed costs would be avoided. Shorter Longer Variable expenses/unit $40 $86 Sales price/unit $44 $90 The contribution margin of the shorter and longer hammers, respectively is a. $200,000/$800,000 c. $8000,000/$4,300,000 b. $620,000/110,000 d. $800,000/$200,000
. A company produces two kinds of hammers: one with longer handles and one with shorter handles. The longer hammer uses better materials and has a better design for back support. During the past year, 200,000 shorter hammers and 50,000 longer hammers were produced and sold. Fixed costs amount to $500,000. If the shorter hammers were dropped from production, $180,000 of the fixed costs would be avoided. If the longer hammers were dropped, $90,000 of the fixed costs would be avoided.
Shorter Longer
Variable expenses/unit $40 $86
Sales price/unit $44 $90
The contribution margin of the shorter and longer hammers, respectively is
|
a. |
$200,000/$800,000
|
c. |
$8000,000/$4,300,000 |
|
b. |
$620,000/110,000 |
d. |
$800,000/$200,000 |
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