4 Valley Industries bomleneck. The The following data are available Product 2 Pr

Question

4 Valley Industries bomleneck. The The following data are available Product 2 Product 1 1,500 1,000 Unit volume- May Per-unit data s 35 15 $ 33 15 5 29 15 Variable cost 3 hrs 2 hrs Contribution margin Furnace hours 4 hrs. Which product is most profitable and should be emphasized in June's advertising campaign? A. Product 1 B. Product 2 C. Product3 D. The products are equally profitable Answer: C the current year, OutlyTech Corp. expected to sell 24,000 telephone switches. Fixed costs or the year were expected to be $12,144,000, the unit sales price was budgeted at $3,200, and unit variable costs were budgeted at $1,440 Outy Tech's margin of safety (MoS) in units is (rounded up to nearest whole number) A 18,270. ? 17.000 c. 20,880. D 16,970 E 22,190

Explanation / Answer

statement showing contribution margin per hour

7$

ANS)C    PRODUCT 3

2 ANS) option B 17000 units

? Break even point =fixed cost/contribution per unit

   contribution per unit= selling price-veriable cost

      =3200-1440

      =1760$ per unit

? fixed cost given=12,144,000$

   ?B.E.P=12144000$/1760$

?    =6900Units

?margin of safety (units)=budgeted sales volume - Break even point units

      =24000-6900

?    =17100units

?    i.e nearest to 17000 units

Product1 Product2 Product3 selling price 35 33 29 less:veriable cost 15 15 15 contribution per unit 20 18 14 furnace hours required per unit 4hr 3hr 2hr contribution per hour 5$ 6$

7$

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