Mountainburg Industries has developed two new products but has only enough plant capacity to introduce one product during the current year. The following data will assist management in deciding which product should be selected. Product L Product W Direct materials $ 44 $ 36 Machining labor ($12/hour) 18 15 Assembly labor ($10Thour) 30 10 Variable overhead ($8,hour) 36 18 Fixed overhead (4/hour) 18 Total Manufacturing Cost 146 88 Estimated selling price per unit $ 170 $ 100 Actual research and development costs $240,000 $175,000 Estima.d advertising costs $500,000 $300,000
Mountainburg Industries has developed two new products but has only enough plant capacity to introduce one product during the current year. The following data will assist management in deciding which product should be selected.
Product L Product W
Direct materials $ 44 $ 36
Machining labor ($12/hour) 18 15
Assembly labor ($10Thour) 30 10
Variable
Fixed overhead (4/hour) 18
Total
Estimated selling price per unit $ 170 $ 100
Actual research and development costs $240,000 $175,000
Estima.d advertising costs $500,000 $300,000
The difference between the $100 estimated selling price for Mountainburg's Product W and its total manufacturing cost of $88 represents
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Operating profit per unit.
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Contribution margin per unit.
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Variable cost per unit.
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Gross margin per unit.
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