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Problem 8-26 Marwick Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 6,000 machine hours, and no other products that the company makes use these machines. Sarah Jacob, the company's operations manager, is preparing the production schedule for the coming month and can't seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget. Michael Stoner, the company's controller, has gathered the following information about the two products: Weight Bench Dumbbell Rack Selling price per unit $50 $61 Direct materials 20 15 Direct labor 4 Variable overhead Fixed overhead 10 Profit per unit $18 $22 Unit sales demand 4,000 7,000 Machine hours per unit 0.5 0.8 Sarah has talked with the marketing department about the situation and suggested that the company raise the sales price on the weight bench to $69 to reduce customer demand. The marketing department believes that at the higher price, demand for the weight bench will drop to 5,800 units. How should Sarah allocate the 6,000 machine hours based on this new information? Machine Hours Weight Bench Dumbbell rack Sarah has talked with the marketing department about the situation and suggested that the company raise the sales price on the weight bench to $69 to reduce customer demand. The marketing department believes that at the higher price, demand for the weight bench will drop to 5,800 units. What total contribution margin will Marwick earn? Total contribution margin $4

Problem 8-26 Marwick Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 6,000 machine hours, and no other products that the company makes use these machines. Sarah Jacob, the company's operations manager, is preparing the production schedule for the coming month and can't seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget. Michael Stoner, the company's controller, has gathered the following information about the two products: Weight Bench Dumbbell Rack Selling price per unit $50 $61 Direct materials 20 15 Direct labor 4 Variable overhead Fixed overhead 10 Profit per unit $18 $22 Unit sales demand 4,000 7,000 Machine hours per unit 0.5 0.8 Sarah has talked with the marketing department about the situation and suggested that the company raise the sales price on the weight bench to $69 to reduce customer demand. The marketing department believes that at the higher price, demand for the weight bench will drop to 5,800 units. How should Sarah allocate the 6,000 machine hours based on this new information? Machine Hours Weight Bench Dumbbell rack Sarah has talked with the marketing department about the situation and suggested that the company raise the sales price on the weight bench to $69 to reduce customer demand. The marketing department believes that at the higher price, demand for the weight bench will drop to 5,800 units. What total contribution margin will Marwick earn? Total contribution margin $4

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 8-26 Marwick Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 6,000 machine hours, and no other products that the company makes use these machines. Sarah Jacob, the company's operations manager, is preparing the production schedule for the coming month and can't seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget. Michael Stoner, the company's controller, has gathered the following information about the two products: Weight Bench Dumbbell Rack Selling price per unit $50 $61 Direct materials 20 15 Direct labor 4 Variable overhead Fixed overhead 10 Profit per unit $18 $22 Unit sales demand 4,000 7,000 Machine hours per unit 0.5 0.8
Transcribed Image Text:Problem 8-26 Marwick Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 6,000 machine hours, and no other products that the company makes use these machines. Sarah Jacob, the company's operations manager, is preparing the production schedule for the coming month and can't seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget. Michael Stoner, the company's controller, has gathered the following information about the two products: Weight Bench Dumbbell Rack Selling price per unit $50 $61 Direct materials 20 15 Direct labor 4 Variable overhead Fixed overhead 10 Profit per unit $18 $22 Unit sales demand 4,000 7,000 Machine hours per unit 0.5 0.8
Sarah has talked with the marketing department about the situation and suggested that the company raise the sales price on the weight bench to $69 to reduce customer demand. The marketing department believes that at the higher price, demand for the weight bench will drop to 5,800 units. How should Sarah allocate the 6,000 machine hours based on this new information? Machine Hours Weight Bench Dumbbell rack Sarah has talked with the marketing department about the situation and suggested that the company raise the sales price on the weight bench to $69 to reduce customer demand. The marketing department believes that at the higher price, demand for the weight bench will drop to 5,800 units. What total contribution margin will Marwick earn? Total contribution margin $4
Transcribed Image Text:Sarah has talked with the marketing department about the situation and suggested that the company raise the sales price on the weight bench to $69 to reduce customer demand. The marketing department believes that at the higher price, demand for the weight bench will drop to 5,800 units. How should Sarah allocate the 6,000 machine hours based on this new information? Machine Hours Weight Bench Dumbbell rack Sarah has talked with the marketing department about the situation and suggested that the company raise the sales price on the weight bench to $69 to reduce customer demand. The marketing department believes that at the higher price, demand for the weight bench will drop to 5,800 units. What total contribution margin will Marwick earn? Total contribution margin $4
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