30. MULTIPLE CHOICE 12-45 Delson Company produces two types of piano legs, plain

Question

30. MULTIPLE CHOICE 12-45 Delson Company produces two types of piano legs, plain and fancy, with unit contribution margins of $8 and $12, respectively Each piano leg must spend time on a special machine. The firm owns four machines that together provide 10,000 hours of machine time per year. The plain leg requires 0.25 hours of machine time, the fancy leg requires 0.5 hours of machine time What is the contribution margin per hour of machine time for a plain leg? a. Ob. $8 Oc. $32 Od. $24 e. $12 31 MULTIPLE CHOICE 12-46 Delson Company produces two types of piano legs, plain and fancy, with unit contribution margins of $8 and $12, respectively Each piano leg must spend time on a special machine. The firm owns four machines that together provide 10,000 hours of machine time per year. The plain leg requires 0.25 hours of machine time, the fancy leg requires 0.5 hours of machine time What is the contribution margin per hour of machine time for a fancy leg? a. Ob. $8 ??. $12 Od. $32 Oe. $24 32. MULTIPLE CHOICE 12-47 Delson Company produces two types of piano legs, plain and fancy, with unit contribution margins of $8 and $12, respectively Each piano leg must spend time on a special machine. The firm owns four machines that together provide 10,000 hours of machine time per year. The plain leg requires 0.25 hours of machine time, the fancy leg requires 0.5 hours of machine time How many of each type of leg must be sold to optimize total contribution margin? a. 20,000 plain legs, 10,000 fancy legs Ob. O plain legs; 20,000 fancy legs c. 10,000 plain legs; o fancy legs Od. 40,000 plain legs; 0 fancy legs e. O plain legs; 10,000 fancy legs

Explanation / Answer

Solution 30:

Contribution margin per unit of Plain Leg= $8

Machine hours per unit of Plain leg = 0.25 hours

Contribution Margin per hour for a plain leg = contribution margin per unit / Machine hours per unit = $8 / 0.25 = $32

Answer is d. $32.

Solution 31:

Contribution margin per unit of Fancy Leg= $12

Machine hours per unit of Fancy Leg = 0.50 hours

Contribution Margin per hour for a fancy leg=contribution margin per unit / Machine hours per unit= $12 / 0.50 = $24

Answer is e. $24.

Solution 32:

Contribution Margin per hour for a Plain Leg = $32

Contribution Margin per hour for a Fancy Leg = $24

Total machine hours = 10000 hours

Since Contribution margin per hour for a Plain Leg is $32 which is higher than that for a fancy leg. Therefore all machine hours should be used to produce Plain Legs.

units of plain legs from 10000 hours = Total Machine Hours / hours required per unit of Plain leg

= 10000 / .25 = 40000 units

Contribution = 40000 units * $8 = $320,000

Therefore, Answer is d. 40000 plain legs; 0 fancy legs.

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