Helena Company manufactures and sells two products. Relevant per unit data conce
ID: 2519767 • Letter: H
Question
Helena Company manufactures and sells two products. Relevant per unit data concerning each product follow. Basic Deluxe Selling price Variable costs Machine hours $45 $19.80 0.70 $51 $23.80 0.80 Compute the contribution margin per machine hour for each product. (Round answers to O decimal places, e.g. 5,275.) Basic Deluxe Contribution margin per machine hour s r 1,020 additional machine hours are available, which product should Helena manufacture? Calculate total contribution margin if the additional 1,020 hours are: (Round intermediate calculation and final answers to 0 decimal plac (1) Divided equally between the products Basic Deluxe Total contribution margin (2) Allocated entirely to the product identified above Total Contrbton margin % Question Attempts: 0 o by Studv Q Search or enter website name 3 5 6Explanation / Answer
Answer
Basic
Deluxe
Selling Price
$45
$51
(-) variable cost
$19.8
$23.8
Contribution margin per unit
$25.2
$27.2
machine hours
0.7
0.8
Contribution margin per machine hours
$36
$34
--If 1020 additional machine hours are available, Product BASIC should be manufactured because it provides more contribution margin per machine hours than Deluxe product.
(1
Basic
Deluxe
Total
Hours allocated
510
510
1020
Contribution margin per machine hours
$36
$34
Total contribution margin
$18,360
$17,340
$35,700
(2
Basic
Deluxe
Total
Hours allocated
1020
0
1020
Contribution margin per machine hours
$36
$34
Total contribution margin
$36,720
$0
$36,720
A
Sales
$ 21,66,000.00
B
Cost of Goods Sold
$ 12,17,760.00
C=A-B
Gross Profits
$ 9,48,240.00
D
Selling & Admin exp
$ 3,03,000.00
E=C-D
Income from Operations
$ 6,45,240.00
F
Interest expenses
$ 10,000.00
G=E-F
Income before income taxes
$ 6,35,240.00
H
Income Tax expense
$ 2,02,400.00
I=G-H
Net Income (Loss)
$ 4,32,840.00
Basic
Deluxe
Selling Price
$45
$51
(-) variable cost
$19.8
$23.8
Contribution margin per unit
$25.2
$27.2
machine hours
0.7
0.8
Contribution margin per machine hours
$36
$34
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