Mierlo-Hout manufactures two types of video cameras, RC1 and RC2. The costs for the products are shown herebelow: RC1 RC2 Units sold 800 2,200 Unit sales price $200 $350 variable cost per unit Raw material Labor $60 $45 $90 $66 Total fixed costs = $40,000 Required: Compute the contribution margin per unit for each of RC1 and RC2. Assuming the fixed costs are allocated based on the units produced. Compute the selling price per unit of each type in order to achieve a profit margin of 40%. Assume that Mierlo-Hout has a maximum working labor capacity of 5,000 labor hours. Labour hours are paid at a rate of $30 per hour. Which of the two products RC1 or RC2 is most profitable for the company? Show all your calculationsin in a clear and organized manner.
Mierlo-Hout manufactures two types of video cameras, RC1 and RC2. The costs for the products are shown herebelow: RC1 RC2 Units sold 800 2,200 Unit sales price $200 $350 variable cost per unit Raw material Labor $60 $45 $90 $66 Total fixed costs = $40,000 Required: Compute the contribution margin per unit for each of RC1 and RC2. Assuming the fixed costs are allocated based on the units produced. Compute the selling price per unit of each type in order to achieve a profit margin of 40%. Assume that Mierlo-Hout has a maximum working labor capacity of 5,000 labor hours. Labour hours are paid at a rate of $30 per hour. Which of the two products RC1 or RC2 is most profitable for the company? Show all your calculationsin in a clear and organized manner.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Mierlo-Hout manufactures two types of video cameras, RC1 and RC2. The costs for the products are shown herebelow:
|
|
RC1 |
RC2 |
|
Units sold |
800 |
2,200 |
|
Unit sales price |
$200 |
$350 |
|
variable cost per unit Raw material Labor |
$60 $45 |
$90 $66 |
|
Total fixed costs = $40,000 |
Required:
- Compute the contribution margin per unit for each of RC1 and RC2.
- Assuming the fixed costs are allocated based on the units produced. Compute the selling price per unit of each type in order to achieve a profit margin of 40%.
- Assume that Mierlo-Hout has a maximum working labor capacity of 5,000 labor hours. Labour hours are paid at a rate of $30 per hour. Which of the two products RC1 or RC2 is most profitable for the company? Show all your calculationsin in a clear and organized manner.
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