Buzz Appliances manufactures two products: Food Processors and Espresso Machines

Question

Buzz Appliances manufactures two products: Food Processors and Espresso Machines. The following data are available Sales price Variable costs Food Processors $155 S80 Espresso Makers $255 $180 The company can manufacture two food processors per machine hour and three espresso machines per machine hour. The company's production capacity is 1,200 machine hours per month. What is the contribution margin per machine hour for espresso machines? OA. $705 O B. $225 O c. $75 O D. $150 Click to select your answer

Explanation / Answer

1) contribution margin per machine for Espresso machines Sales price 255 Variable costs 180 Contribution margin per unit 75 units per machine hour 3 contribution margin per MH 225 Answer :option B $225 2) option D less than the fixed costs saved 3) Sales (1470*43) 63210 less:Variable cost direct materials ( (220,000/41000)*1470 7887.805 Direct labor incurred (430000/41000)*1470 15417.07 variable MOH (150000/41000)*1470 5378.049 total variable expense 28683 increase in net operating income 34527 option B) $34,530

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