Planet Fit, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows: LOADING... (Click the icon to view the data.) The weight-lifting craze suggests that Planet Fit can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same production departments. Read the requirements LOADING... . Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin per machine hour for each machine. (Reduce the fixed manufacturing overhead to the lowest possible ratio of machine hours in order to calculate the contribution margin per machine hour. Example: 8:4 would be 2:1. Enter the amounts to the nearest cent.) Model 9 Model 14 - = Contribution margin per unit ÷ = Contribution margin per machine hour Planet Fit, Inc. should produce: A. Model 9, since this model results in the higher contribution margin per unit. B. Both Model 9 and Model 14 since both models provide positive contribution margins. C. Model 9, since this model results in the higher operating income per unit. D. Model 14, since this model results in the higher contribution margin per machine hour.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Planet Fit,

Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows:

(Click

the icon to view the data.)

The weight-lifting craze suggests that

Planet Fit

can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same production departments.

Read the

requirements

Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin per machine hour for each machine. (Reduce the fixed manufacturing overhead to the lowest possible ratio of machine hours in order to calculate the contribution margin per machine hour. Example: 8:4 would be 2:1. Enter the amounts to the nearest cent.)

		Model 9	Model 14

-
=	Contribution margin per unit
÷
=	Contribution margin per machine hour

Planet Fit,

Inc. should produce:

Model 9,

since this model results in the higher contribution margin per unit.

Both Model 9 and Model 14 since both models provide positive contribution margins.

Model 9,

since this model results in the higher operating income per unit.

Model 14,

since this model results in the higher contribution margin per machine hour.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions