Service Emphasis The following analysis of selected data is for each of the two services Rockville Corporation provides. Service G Service H Per-unit data at 10,000 services Sales price Service costs: Variable Fixed Selling and administrative expenses: Variable Fixed Revenue Less: Variable cost Contribution margin Labor hours per unit Contribution margin per labor hour $ $ $36 $ 19 6 G 5 3 In the Rockville's operation, labor capacity is the company's constraining resource. Each unit of G requires 3 hours of labor, and each unit of H requires 1 hours of labor. Assuming that all service can be sold at a normal price, prepare an analysis showing which of the two services should be provided with any unused productive capacity that Rockville might have. Service $23 36 ✔ $ 25 x 11 x $ 3 ✔ 3.67 * $ 15 4 2 1 H 23 ✔ 19 x 4 x 1 ✓ 4 x Any unused capacity should be devoted to Service H, which has $2 less contribution margin per labor hour than does Service G. Any unused capacity should be devoted to Service G, which has $2 more contribution margin per labor hour than does Service H.X Any unused capacity should be devoted to Service H, which has $2 more contribution margin per labor hour than does Service G.

Service Emphasis The following analysis of selected data is for each of the two services Rockville Corporation provides. Service G Service H Per-unit data at 10,000 services Sales price Service costs: Variable Fixed Selling and administrative expenses: Variable Fixed Revenue Less: Variable cost Contribution margin Labor hours per unit Contribution margin per labor hour $ $ $36 $ 19 6 G 5 3 In the Rockville's operation, labor capacity is the company's constraining resource. Each unit of G requires 3 hours of labor, and each unit of H requires 1 hours of labor. Assuming that all service can be sold at a normal price, prepare an analysis showing which of the two services should be provided with any unused productive capacity that Rockville might have. Service $23 36 ✔ $ 25 x 11 x $ 3 ✔ 3.67 * $ 15 4 2 1 H 23 ✔ 19 x 4 x 1 ✓ 4 x Any unused capacity should be devoted to Service H, which has $2 less contribution margin per labor hour than does Service G. Any unused capacity should be devoted to Service G, which has $2 more contribution margin per labor hour than does Service H.X Any unused capacity should be devoted to Service H, which has $2 more contribution margin per labor hour than does Service G.

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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