Edge Company produces two models of its product with the same machine. The machine has a capacity of 154 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 $ 140 55 $85 Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin 1 hour 500 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin Deluxe $ 170 102 $68 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? Standard Deluxe Total Deluxe 3. Assume the maximum demand for the Standard model is 80 units (not 500 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total

Edge Company produces two models of its product with the same machine. The machine has a capacity of 154 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 $ 140 55 $85 Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin 1 hour 500 units Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin Deluxe $ 170 102 $68 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? Standard Deluxe Total Deluxe 3. Assume the maximum demand for the Standard model is 80 units (not 500 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total

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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