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Diego makes and sells two products, RED and BLUE using the same machines. RED and BLUE have the following selling prices and variable costs per unit. Product RED Product BLUE Selling Price 5.00 7.50 Variable Costs 3.50 5.50 However, it takes one hour to produce one unit of Product REd, while it takes two hours to produce one unit of Product BLUE. (1) Determine the product's contribution margin per machine hour. (2) Which Product should be produced more?

Diego makes and sells two products, RED and BLUE using the same machines. RED and BLUE have the following selling prices and variable costs per unit. Product RED Product BLUE Selling Price 5.00 7.50 Variable Costs 3.50 5.50 However, it takes one hour to produce one unit of Product REd, while it takes two hours to produce one unit of Product BLUE. (1) Determine the product's contribution margin per machine hour. (2) Which Product should be produced more?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 4 * Question 4 Diego makes and sells two products, RED and BLUE using the same machines. RED and BLUE have the following selling prices and variable costs per unit. Product RED Product BLUE Selling Price 5.00 7.50 Variable Costs 3.50 5.50 However, it takes one hour to produce one unit of Product REd, while it takes two hours to produce one unit of Product BLUE. (1) Determine the product's contribution margin per machine hour. (2) Which Product should be produced more?
Transcribed Image Text:Question 4 * Question 4 Diego makes and sells two products, RED and BLUE using the same machines. RED and BLUE have the following selling prices and variable costs per unit. Product RED Product BLUE Selling Price 5.00 7.50 Variable Costs 3.50 5.50 However, it takes one hour to produce one unit of Product REd, while it takes two hours to produce one unit of Product BLUE. (1) Determine the product's contribution margin per machine hour. (2) Which Product should be produced more?
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