Edge Company produces two models of its product with the same machine. The machine has a capacity of 172 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 Standard $ 230 100 $ 130 1 hour 650 units Deluxe $ 260 156 $ 104 2 hours 250 units
Edge Company produces two models of its product with the same machine. The machine has a capacity of 172 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 Standard $ 230 100 $ 130 1 hour 650 units Deluxe $ 260 156 $ 104 2 hours 250 units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 172 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
Standard
$ 230
100
$ 130
1 hour
650 units
Deluxe
$ 260
156
$ 104
2 hours
250 units
Transcribed Image Text:Required:
1. Determine the contribution margin per machine hour for each model.
Product Contribution Margin
Contribution margin per unit
Machine hours 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
$
$
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin
Standard
$
130 $
Standard
1
130 $
2. How many units of each model should the company produce? How much total contribution margin does this mix
produce per month?
172
130
0
Deluxe
$
90
Deluxe
104
2
52
Deluxe
104
0
3. Assume the maximum demand for the Standard model is 90 units (not 650 units). How many units of each model should
the company produce? How much total contribution margin does this mix produce per month?
Standard
Total
172
Total
90
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