Problem 6-4A Tanek Industries manufactures and sells three different models of w

Question

Problem 6-4A 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 Selling price Variable costs and expenses Machine hours required Economy Standard Deluxe $112 $52 1.6 $34 $18 0.5 $56 $22 0.8 Calculate contribution margin per unit. Product Economy Standard Deluxe Contribution margin per unit 16 34 61 LINK TO TEXT VIDEO: SIMILAR PROBLEM Ignoring the machine time constraint, which single product should Tanek Industries produce?

Explanation / Answer

Contribution margin per unit :

Should prepare product Delux.

If additional machine time could be obtained the additional time should be used to produce the product standard.

Economy Standard Deluxe Contribution margin per unit 16 34 60

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