WileyPLUs WileyPLUS Problem 19-4A Problem 19-4A Tanek Industries manufactures an

Question

WileyPLUs WileyPLUS Problem 19-4A Problem 19-4A Tanek Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Tanek is currently operating at full capacity with limited machine time. Sales and production information relevant to each model follows. Product Economy Standard Deluxe Selling price Variable costs and expenses Machine hours required $41 $22 0.5 $68 $27 0.8 $136 $63 1.6 Calculate contribution margin per unit. Product Economy Standard Deluxe Contribution margin per unit Ignoring the machine time constraint, which single product should Tanek Industries produce?

Explanation / Answer

Calculation of Contribution MArgin Per Unit

Deluxe should be produced as it has highest contribution

Standard should be produced

Economy Standard Deluxe Selling Price $ 41 $ 68 $ 136 Variable Cost $ 22 $ 27 $ 63 Contribution $ 19 $ 41 $ 73

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