Problem 10-5A Analysis of sales mix strategies LO A1 Edgerron Company is able to

Question

Problem 10-5A Analysis of sales mix strategies LO A1 Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available Product G $ 80 25 $ 55 0.4 hours 600 units Product B $ 110 Selling price per unit Variable costs per unit Contribution margin per unit Machine hours to produce 1 unit Maximum unit sales per month $ 44 1.0 hours 200 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $5,500 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)

Explanation / Answer

1 product G product B Contribution margin per unit 55 44 machine hours per unit 0.4 1 contribution margin per machine hour 137.5 44 product G product B total Maximum number of units to be sold 600 200 hours required to produce maximum units 240 200 440 2) product G product B total hours dedicated to the production of each product 176 176 units produced for most profitable sales mix 440 contribution margin per unit 55 total contribution margin - one shift 24200 24,200 3) product G product B total hours dedicated to the production of each product 240 112 352 units produced for most profitable sales mix 600 112 contribution margin per unit 55 44 total contribution margin-two shifts 33000 4928 37928 contribution margin -one shifts 24,200 change in contribution margin 13,728 change in fixed costs 5,500 change in operating income (loss) 8,228 should the company pursue marketing campaign yes 4) product G product B total hours dedicated to the production of each product 280 72 352 units produced for most profitable sales mix 700 72 contribution margin per unit 55 44 total contribution margin-two shifts & marketing campaogn 38500 3168 41668 contribution margin -two shifts without marketing ca 37,928 change in contribution margin 3,740 Additional marketing costs 4,500 change in fixed costs 5,500 change in operating income (loss) -6,260 should the company pursue marketing campaign No

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.