Problem 10-3A (Algo) Sales mix strategies LO P3 Edge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per month. The following information is available. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit Machine hours per unit Contribution margin per machine hour Standard 1. Determine the contribution margin per machine hour for each model. Product Contribution Margin Hours dedicated to the production of each product Units produced for most profitable sales mi Contribution margin per unit Total contribution margin $ 190 80 $ 110 1 hour 550 unite Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin S Deluxe $ 220 132 $ 88 $ 2 hours 200 units Standard 110 S Standard 110 $ 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Deluxe 164 164 110 18,040 $ Deluxe 88 44 Deluxe 0 88 Total 164 3. Assume the maximum demand for the Standard model is 80 units (not 550 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Total $ 18,040
Problem 10-3A (Algo) Sales mix strategies LO P3 Edge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per month. The following information is available. Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month Required: Contribution margin per unit Machine hours per unit Contribution margin per machine hour Standard 1. Determine the contribution margin per machine hour for each model. Product Contribution Margin Hours dedicated to the production of each product Units produced for most profitable sales mi Contribution margin per unit Total contribution margin $ 190 80 $ 110 1 hour 550 unite Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin S Deluxe $ 220 132 $ 88 $ 2 hours 200 units Standard 110 S Standard 110 $ 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Deluxe 164 164 110 18,040 $ Deluxe 88 44 Deluxe 0 88 Total 164 3. Assume the maximum demand for the Standard model is 80 units (not 550 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Total $ 18,040
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
b
Transcribed Image Text:Problem 10-3A (Algo) Sales mix strategies LO P3
Edge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per
month. The following information is available.
Selling price per unit
Variable costs per unit
Contribution margin per unit
Machine hours per unit
Maximum unit sales per month
Required:
Contribution margin per unit
Machine hours per unit
Contribution margin per machine hour
1. Determine the contribution margin per machine hour for each model.
Product Contribution Margin
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Standard
$ 190
80
$ 110
Contribution margin per unit
Total contribution margin
1 hour
550 units
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin
$
$
Deluxe
$ 220
132
$88
$
2 hours
200 units
Standard
2. How many units of each model should the company produce? How much total contribution margin does this mix
produce per month?
Total
110 S
1
110 $
Standard
Deluxe
164
164
110
18,040 S
Deluxe
88
2
44
Deluxe
3. Assume the maximum demand for the Standard model is 80 units (not 550 units). How many units of each model should
the company produce? How much total contribution margin does this mix produce per month?
Standard
0
0
88
0 $ 18,040
164
Total
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
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