Exercise 19-11 Mars Company manufactures and sells three products. Relevant per

Question

Exercise 19-11 Mars Company manufactures and sells three products. Relevant per unit data concerning each product are given below: Product Selling price Variable costs and expenses Machine hours to produce $8 $12 $16 $5 $10 $13 2 Compute the contribution margin per unit of limited resource (machine hours) for each product. (Round contribution margin per unit to 2 decimal places, e.g 1.25.) Product A Product B Product C Contribution margin per unit of limited resource s LINK TO TEXT Assuming 3,000 additional machine hours are available, which product should be manufactured?

Explanation / Answer

Product A Product B Product C Contribution margin per unit 3 2 3 Machine hours per unit 2 1 2 Contribution margin per unit of limited resource 1.5 2 1.5 Product B shoule be manufactured 1 Divided equally among products 5000 =(1000*1.5)+(1000*2)+(1000*1.5) 2 Allocated entirely to the product 6000 =3000*2

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