a) What is the contribution marginper hour of processing for eachproduct?b) What is the optimal mix ofproducts in units if there are noconstraints on demand?Socks:Gloves:c) What is the total contributionmargin earned for the optimal mixof products?Socks (units):Gloves (units): Abbey & Aliyah Inc. manufacturewool socks and gloves foroutdoor sports. Both productsmust go through a special processwhich makes the wool waterproof. The processing departmentwhich does this has a capacity ofonly 1,280 hours per month. Thefollowing information is availableabout the products manufactured:ProductSelling priceper unitVariable costsper unitTime requiredto processone unit (inhours)Socks Gloves$30 $40122 hrs163 hrs

The contribution margin per unit is calculated as the difference between selling price and variable…

hat is ne cc contr margin per hour of processing for each product? b) What is the optimal mix of products in units if there are no constraints on demand? Socks: Gloves: c) What is the total contribution margin earned for the optimal mix of products?

hat is ne cc contr margin per hour of processing for each product? b) What is the optimal mix of products in units if there are no constraints on demand? Socks: Gloves: c) What is the total contribution margin earned for the optimal mix of products?

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

a) What is the contribution margin
per hour of processing for each
product?
b) What is the optimal mix of
products in units if there are no
constraints on demand?
Socks:
Gloves:
c) What is the total contribution
margin earned for the optimal mix
of products?
Socks (units):
Gloves (units):

Abbey & Aliyah Inc. manufacture
wool socks and gloves for
outdoor sports. Both products
must go through a special process
which makes the wool water
proof. The processing department
which does this has a capacity of
only 1,280 hours per month. The
following information is available
about the products manufactured:
Product
Selling price
per unit
Variable costs
per unit
Time required
to process
one unit (in
hours)
Socks Gloves
$30 $40
12
2 hrs
16
3 hrs

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