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 Product B Selling price per unit Variable costs per unit $ 120 $ 160 90 40 Contribution margin per unit $ 80 $ 70 Machine hours to produce 1 unit Maximum unit sales per month 0.4 hours 1.0 hours 600 units 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 $15,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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2. How many units of Product G and Product B should the company produce if it continues to operate with only one shift?
How much total contribution margin does this mix produce each month?
Product G
Product B
Total
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin - one shift
3. If the company adds another shift, how many units of Product G and Product B should it produce? How much total
incremental income would this mix produce each month? Should the company add the new shift?
Product G
Product B
Total
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin - two shifts
Total incremental income
Transcribed Image Text:2. How many units of Product G and Product B should the company produce if it continues to operate with only one shift? How much total contribution margin does this mix produce each month? Product G Product B Total Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin - one shift 3. If the company adds another shift, how many units of Product G and Product B should it produce? How much total incremental income would this mix produce each month? Should the company add the new shift? Product G Product B Total Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin - two shifts Total incremental income
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
Product B
Selling price per unit
Variable costs per unit
$ 120
$ 160
40
90
Contribution margin per unit
$ 80
$70
Machine hours to produce 1 unit
Maximum unit sales per month
0.4 hours
1.0 hours
600 units
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 $15,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter
operating losses, if any, as negative values.)
1. Determine the contribution margin per machine hour that each product generates.
Product G
Product B
Contribution margin per unit
Contribution margin per machine hour
Product G
Product B
Total
Maximum number of units to be sold
600
200
Hours required to produce maximum units
Transcribed Image Text: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 Product B Selling price per unit Variable costs per unit $ 120 $ 160 40 90 Contribution margin per unit $ 80 $70 Machine hours to produce 1 unit Maximum unit sales per month 0.4 hours 1.0 hours 600 units 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 $15,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.) 1. Determine the contribution margin per machine hour that each product generates. Product G Product B Contribution margin per unit Contribution margin per machine hour Product G Product B Total Maximum number of units to be sold 600 200 Hours required to produce maximum units
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