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uments produces two models of binoculars. Information for each model is as follows:

uments produces two models of binoculars. Information for each model is as follows:

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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Insiteful Instruments produces two models of binoculars. Information for each model is as follows: Model 101 Model 100 $ 200 Sales price per unit Costs and expenses per unit: Direct materials Direct labor Manufacturing overhead (applied at the rate of $18 per machine-hour, 1/3 of which is fixed and 2/3 variable) Variable selling expenses Total costs and expenses per unit Profit per unit Machine-hours required to produce one unit $ 51 33 36 30 150 $ 50 $38 30 72 15 $ 215 o. Prepare a schedule showing the contribution margin per machine-hour for each product. b. Which of the two products should be discontinued? 155 $ 60 Total manufacturing overhead amounts to $180,000 per month, one-third of which is fixed. The demand for either product is sufficient to keep the plant operating at full capacity (10,000 machine-hours per month). Assume that only one product is to be produced in the future.
Transcribed Image Text:Insiteful Instruments produces two models of binoculars. Information for each model is as follows: Model 101 Model 100 $ 200 Sales price per unit Costs and expenses per unit: Direct materials Direct labor Manufacturing overhead (applied at the rate of $18 per machine-hour, 1/3 of which is fixed and 2/3 variable) Variable selling expenses Total costs and expenses per unit Profit per unit Machine-hours required to produce one unit $ 51 33 36 30 150 $ 50 $38 30 72 15 $ 215 o. Prepare a schedule showing the contribution margin per machine-hour for each product. b. Which of the two products should be discontinued? 155 $ 60 Total manufacturing overhead amounts to $180,000 per month, one-third of which is fixed. The demand for either product is sufficient to keep the plant operating at full capacity (10,000 machine-hours per month). Assume that only one product is to be produced in the future.
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