Per Unit Deluxe Toothbrush Toothbrush Standard Sales price $ 88 $ 54 Variable expense 22 18 Contribution margin 66 36 Contribution margin ratio 75.0% 66.7%
Per Unit Deluxe Toothbrush Toothbrush Standard Sales price $ 88 $ 54 Variable expense 22 18 Contribution margin 66 36 Contribution margin ratio 75.0% 66.7%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Making product mix decisions
Brik, located in San Antonio, Texas, produces two lines of electric toothbrushes: deluxe and standard. Because Erik can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data:
After expansion, the factory will have a production capacity of 4,900 machine hours per month. The plant can manufacture either 65 standard electric toothbrushes or 27 deluxe electric toothbrushes per machine hour.
Requirements
- Identify the constraining factor for Brik.
- Prepare an analysis to show which product line the company should emphasize.
Transcribed Image Text:Per Unit
Deluxe
Toothbrush Toothbrush
Standard
Sales price
$ 88
$ 54
Variable expense
22
18
Contribution margin
66
36
Contribution margin ratio
75.0%
66.7%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education