Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. PLEASE NOTE: All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). For units of blades for table saws and hand saws, use commas as needed (i.e. 1,234). Part A: If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how much will profit increase if 200 more hours of machine time can be obtained? [HINT - You should convert the hours to minutes.] What is the contribution margin per the constrained resource for table saw blades? . What is the contribution margin per the constrained resource for handsaw blades? . Given the answers to the first two questions, which product gets all of the additional 200 hours? . Please note: Your answer is either "Table Saw Blades" or "Handsaw Blades" - capital first letters and no quotes. How much will profit increase if 200 more hours of machine time can be obtained? Part B: If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how many of each product should be made? [HINT - You should convert the hours to minutes.] Given the 5,000 available hours, how many handsaw blades should Power Corp. make? Given the 5,000 available hours, how many table saw blades should Power Corp. make?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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8. Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35.

PLEASE NOTE: All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). For units of blades for table saws and hand saws, use commas as needed (i.e. 1,234).

Part A: If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how much will profit increase if 200 more hours of machine time can be obtained? [HINT - You should convert the hours to minutes.]

What is the contribution margin per the constrained resource for table saw blades? .
What is the contribution margin per the constrained resource for handsaw blades? .
Given the answers to the first two questions, which product gets all of the additional 200 hours? . Please note: Your answer is either "Table Saw Blades" or "Handsaw Blades" - capital first letters and no quotes.
How much will profit increase if 200 more hours of machine time can be obtained?

Part B: If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how many of each product should be made? [HINT - You should convert the hours to minutes.]

Given the 5,000 available hours, how many handsaw blades should Power Corp. make?
Given the 5,000 available hours, how many table saw blades should Power Corp. make?

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