Pharoah Industries manufactures chairs and tables that are in high demand by localoffice furniture stores. Following is information for each of these products:Selling price per itemVariable cost per itemContribution margin per itemMachine hours per itemChairsO $11270$11520$10880O $17390$78.0061.00$17.001.60Tables$95.0077.00$18.001.60Pharoah has 1024 machine hours available each month. The demand for chairs is 610units per month and the demand for tables is 390 units per month. If Pharoah allocatesits production capacity between the chairs and tables so that it maximizes the company'scontribution margin, what will the total contribution margin be?

The contribution margin is calculated as the difference between the sales and variable costs. The…

Answered: Selling price per item Variable cost…

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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Sell or Process Further Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $36 per unit. Normally, 42,000 units are sold each year. Variable unit cost data on the assembly are as follows: Direct material $10 Direct labor 8 Variable manufacturing overhead 4 The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $41 per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $160,000 to $180,000. Prepare an analysis showing whether Jensen should process the assemblies further. Use a negative sign with answer to only indicate a loss from processing assemblies further; otherwise do not use negative signs with your answers. Sell of Process Further Differential Analysis $ Differential revenue Differential costs Direct material…
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d
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