Edge Company produces two models of its product with the same machine. The machine has a capacity of 142 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 Standard $80 25 $55 1. Determine the contribution margin per machine hour for each model Product Contribution Margin 1 hour. 600 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin Deluxe $ 110 66 $44 2 hours 200 units Standard Deluxe Contribution margin per machine hour 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total 3. Assume the maximum demand for the Standard model is 70 units (not 600 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month?
Edge Company produces two models of its product with the same machine. The machine has a capacity of 142 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 Standard $80 25 $55 1. Determine the contribution margin per machine hour for each model Product Contribution Margin 1 hour. 600 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin Deluxe $ 110 66 $44 2 hours 200 units Standard Deluxe Contribution margin per machine hour 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total 3. Assume the maximum demand for the Standard model is 70 units (not 600 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Edge Company produces two models of its product with the same machine. The machine has a capacity of 142 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
1. Determine the contribution margin per machine hour for each model
Product Contribution Margin
Contribution margin per machine hour
Standard:
$ 80
25
$ 55
- 1 hour
600 units
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin
Deluxe
$ 110
66
$44
2 hours
200 units
Standard
Deluxe
2. How many units of each model should the company produce? How much total contribution margin does this mix
produce per month?
Standard
Total
Deluxe
3. Assume the maximum demand for the Standard model is 70 units (not 600 units). How many units of each model should
the company produce? How much total contribution margin does this mix produce per month?
Transcribed Image Text:3. Assume the maximum demand for the Standard model is 70 units (not 600 units). How many units of each model should
the company produce? How much total contribution margin does this mix produce per month?
Standard
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin
Deluxe
Total
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