Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. Product G Product B Selling price per unit $ 120 $ 160 Variable costs per unit 40 90 Contribution margin per unit $ 80 $ 70 Machine hours to produce 1 unit 0.4 hours 1.0 hours Maximum unit sales per month 600 units 200 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $15,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)
Solved
Show answers
More tips
- F Food and Cooking What age is appropriate for giving your child cocoa?...
- A Auto and Moto How to Start a Diesel Engine in Cold Weather?...
- F Family and Home How to Remove Tar Stains: Tips and Recommendations from Experts...
- F Family and Home How to Remove Fading from Clothes: Tips and Tricks...
- S Sport How to Do a Jumping Split...
- H Health and Medicine How Did Inna Lose Weight on Dom 2?...
- F Family and Home How to Properly Fold Napkins in a Napkin Holder?...
- F Food and Cooking How to Set Up Ventrilo - The Ultimate Guide...
- S Science and Technology How to Make a Homemade Smoker: The Ultimate Guide...
- A Auto and Moto Battle for the Relocation of The Cherkizovsky Market: Who Won?...
Answers on questions: Business
- B Business Your employer emailed a question and to all employees to gather data on employee satisfaction what type of research is your company doing...
- B Business How many warnings do you get on before you get banned?...
- B Business Google this for me: what is the difference between a corporation and a startup?...
- S Social Studies Why did child labor become so widely used during the Progressive Era? Select three options. Help please!!!...
- C Chemistry What are the matches please...
- M Mathematics The price of one share of a stock fell $4 each day for 8 days. By how much did the value of the stock change in the time period? A. $32 B. $24 C. -$24 D. -$32...
- M Mathematics Find the length and width of a rectangle with maximum area that has a perimeter of 9P units....
- S Social Studies Another name for the Neolithic Age is the . A. Bronze Age B. New Stone Age C. Old Stone Age...
- M Mathematics Proportions, assist me please!...
- E English Write 2 sentences about an animal(s) using(participial phrase)...
Ответ:
Product G Product B
Selling price per unit $120 $160
Variable costs per unit $40 $90
Contribution margin per unit $80 $70
Machine hours per unit 0.4 hours 1.0 hours
Max. unit sales per month 600 units 200 units
machine operate 8 hours per day during 22 days per month, total hours of machine work per month = 176
Product G Product B
Machine hours per unit 0.4 hours 1.0 hours
Contribution margin per $200 $70
machine hour
number of hours needed to 240 200 440
produce maximum sales in total
Currently the company should only produce Product G, since it is able to produce 440 units per month and that generates a contribution margin of $35,200.
If the company decides to produce in two shifts, then it should produce 600 units of Product G (using 240 machine hours) and use the remaining 112 machine hours to produce 112 units of product B. This will generate a total contribution margin of: $48,000 +$7,840 = $55,840.
The additional contribution margin generated = $55,840 - $35,200 = $20,640, which is higher than the additional costs generated by working in two shifts. The second shift will increase the company's p´profits by $5,640 (= $20,640 - $15,000).
Ответ: