Required: 1- Calculate the contribution per unit for each product, and show which one is the most profitable for the company. 2- The fixed costs are allocated based on the units produced. Calculate the selling price per unit of each product to reach a profit margin of 15%. ( 3- The Company has a maximum working capacity of 815 labor hours. Labour hours are paid at a rate of $16 per hour. Show which production plan is most profitable for the Company.
Required: 1- Calculate the contribution per unit for each product, and show which one is the most profitable for the company. 2- The fixed costs are allocated based on the units produced. Calculate the selling price per unit of each product to reach a profit margin of 15%. ( 3- The Company has a maximum working capacity of 815 labor hours. Labour hours are paid at a rate of $16 per hour. Show which production plan is most profitable for the Company.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Al Kamel manufactures two types of doors, D1 and D2. Costing information for products D1
and D2 is set out below:
Nb of units sold
Selling price/unit
Total variable cost/unit
Raw material
Labor
Total fixed costs = $20,000
D1
350
$130
$35
$24
D2
650
$150
$40
$32
Required:
1- Calculate the contribution per unit for each product, and show which one is the most
profitable for the company.
2- The fixed costs are allocated based on the units produced. Calculate the selling price per
unit of each product to reach a profit margin of 15%. (
3- The Company has a maximum working capacity of 815 labor hours. Labour hours are
paid at a rate of $16 per hour. Show which production plan is most profitable for the
Company.
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