Edge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per month. The following information is available. StandardDeluxeSelling price per unit$ 190 $ 220 Variable costs per unit80 132 Contribution margin per unit$ 110 $ 88 Machine hours per unit1hour2hoursMaximum unit sales per month550units200unitsRequired: 1. Determine the contribution margin per machine hour for each model.Product Contribution MarginContribution margin per unitContribution margin per machine hourHours dedicated to the production of each productUnits produced for most profitable sales mixContribution margin per unitTotal contribution marginStandard2. How many units of each model should the company produce? How much total contribution margin does this mixproduce per month?Hours dedicated to the oduction each ductUnits produced for most profitable sales mixContribution margin per unitTotal contribution marginDeluxeStandardDeluxe3. Assume the maximum demand for the Standard model is 80 units (not 550 units). How many units of each model shouldthe company produce? How much total contribution margin does this mix produce per month?StandardTotalDeluxeTotal

The product providing highest contribution margin per hour is more profitable and hence, in case of…

dge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per month. The following information is available. Standard Deluxe Selling price per unit $ 190 $ 220 Variable costs per unit 80 132 Contribution margin per unit $ 110 $ 88 Machine hours per unit 1 hour 2 hours Maximum unit sales per month 550 units 200 units Required:

dge Company produces two models of its product with the same machine. The machine has a capacity of 164 hours per month. The following information is available. Standard Deluxe Selling price per unit $ 190 $ 220 Variable costs per unit 80 132 Contribution margin per unit $ 110 $ 88 Machine hours per unit 1 hour 2 hours Maximum unit sales per month 550 units 200 units Required:

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

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	Standard	Deluxe
Selling price per unit	$ 190		$ 220
Variable costs per unit	80		132
Contribution margin per unit	$ 110		$ 88
Machine hours per unit	1	hour	2	hours
Maximum unit sales per month	550	units	200	units

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