Question

Consider the following production and cost data for two
products, K and T:

Product K | Product T | |

Contribution margin per unit | $35 | $40 |

Machine minutes needed per unit | 7 minutes | 5 minutes |

A total of 14,700 machine minutes are available each period, and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period?

Answer #1

Product K | Product T | |

Contribution Margin per Unit | $35 | $40 |

Machine minutes needed per unit | 7 mins | 5 mins |

Contribution Per Machine Minute | =35/7 | =40/5 |

5 | 8 | |

Ranking based on contribution per machine Minute | 2 | 1 |

Demand | Unlimited | Unlimited |

In this case, as the demand for both the product is unlimited so we will produce the product with higher Contribution per Machine Minute. | ||

Total Available Machine Hour | 14700 Minutes | |

Contribution Margin per machine minutes for Product T | $8 | |

Maximum Possible Total Contribution Margin | =14700*$8 | |

117600 | ||

Murphy’s, Inc. has the following production and cost data for
two of its products, Standard and Deluxe:
Standard
Deluxe
Contribution margin per unit
$67.62
$37.30
Machine hours needed per unit
2.10
1.00
A total of 80,000 hours is available each period for the production
of the two products. The demand for both products is strong and
Murphy will be able to sell as many of either product as it can
produce. Ignoring qualitative issues, which of the two products
should...

Power Corp. makes 2 products: blades for table saws and blades
for handsaws. Each product passes through the sharpening machine
area, which is the chief constraint during production. Handsaw
blades take 15 minutes on the sharpening machine and have a
contribution margin per blade of $15. Table saw blades take 20
minutes on the sharpening machine and have a contribution margin
per blade of $35. If it is assumed that Power Corp. has 5,000 hours
available on the sharpening machine...

In Zhuang LTD , data concerning two products are Contribution
margin per unit—Product A $10, Product B $12; machine hours
required for one unit—Product A 2, Product B 3.
a) Calculate the contribution margin per unit of the limited
resource for each product:
Product A: $ Answer per hour
Product B: $ Answer per hour
b) If Zhuang LTD has a limited number of machine hours and can sell
all the units produced of either product, which product should it...

In Zhuang LTD , data concerning two products are Contribution
margin per unit—Product A $10, Product B $12; machine hours
required for one unit—Product A 2, Product B 3.
a) Calculate the contribution margin per unit of the limited
resource for each product:
Product A: $ Answer per hour
Product B: $ Answer per hour
b) If Zhuang LTD has a limited number of machine hours and can sell
all the units produced of either product, which product should it...

Colt Company owns a machine that can produce two specialized
products. Production time for Product TLX is three units per hour
and for Product MTV is four units per hour. The machine’s capacity
is 2,400 hours per year. Both products are sold to a single
customer who has agreed to buy all of the company’s output up to a
maximum of 4,080 units of Product TLX and 4,580 units of Product
MTV. Selling prices and variable costs per unit to...

5.
Colt Company owns a machine that can produce two specialized
products. Production time for Product TLX is two units per hour and
for Product MTV is five units per hour. The machine’s capacity is
2,100 hours per year. Both products are sold to a single customer
who has agreed to buy all of the company’s output up to a maximum
of 3,570 units of Product TLX and 1,955 units of Product MTV.
Selling prices and variable costs per unit...

Colt Company owns a machine that can produce two specialized
products. Production time for Product TLX is three units per hour
and for Product MTV is four units per hour. The machine’s capacity
is 2,400 hours per year. Both products are sold to a single
customer who has agreed to buy all of the company’s output up to a
maximum of 4,080 units of Product TLX and 4,580 units of Product
MTV. Selling prices and variable costs per unit to...

Mars Company manufactures and sells three products. Relevant per
unit data concerning each product are given below:
Product
A
B
C
Selling price
$10
$13
$18
Variable costs and expenses
$5
$11
$15
Machine hours to produce
2
1
2
Compute the contribution margin per unit of limited resource
(machine hours) for each product. (Round contribution
margin per unit to 2 decimal places, e.g. 1.25.)
Product A
Product B
Product C
Contribution margin per unit of limited resource
$
$...

Mars Company manufactures and sells three products. Relevant per
unit data concerning each product are given below:
Product
A
B
C
Selling price
$8
$15
$20
Variable costs and expenses
$5
$12
$17
Machine hours to produce
2
1
2
Compute the contribution margin per unit of limited resource
(machine hours) for each product. (Round contribution
margin per unit to 2 decimal places, e.g. 1.25.)
Product A
Product B
Product C
Contribution margin per unit of limited resource
$
$...

Mars Company manufactures and sells three products. Relevant per
unit data concerning each product are given below: Product A B C
Selling price $ 8 $ 12 $ 16 Variable costs and expenses $ 5 $ 10 $
13 Machine hours to produce 2 1 2 Compute the contribution margin
per unit of limited resource (machine hours) for each product.
(Round contribution margin per unit to 2 decimal places, e.g.
1.25.) Assuming 3,000 additional machine hours are available, which
product...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 5 minutes ago

asked 15 minutes ago

asked 28 minutes ago

asked 42 minutes ago

asked 43 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago