Selling price per unit Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month $60 20 $40 1 hour 550 units $80 30 $50 _ 2 hours 175 units Required 1. Determine the contribution margin per machine hour for each model. 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? 3. Assume the maximum demand for the Standard model is 180 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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Problem 23-3B Sales mix strategies P3
Sung Company produces two models of its product with the same machine. The machine has a capacity of 200 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
Standard
$60
20
$40
1 hour
550 units
Pro
$80
30
$50
2 hours
175 units
Required
1. Determine the contribution margin per machine hour for each model.
2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month?
3. Assume the maximum demand for the Standard model is 180 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?
Transcribed Image Text:Problem 23-3B Sales mix strategies P3 Sung Company produces two models of its product with the same machine. The machine has a capacity of 200 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 Standard $60 20 $40 1 hour 550 units Pro $80 30 $50 2 hours 175 units Required 1. Determine the contribution margin per machine hour for each model. 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? 3. Assume the maximum demand for the Standard model is 180 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?
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