Fitness Gym, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows: E (Click the icon to view the data.) The weight-lifting craze suggests that Fitness Gym can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same production departments. Read the requirements. Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin per machine hour for each machine. (Reduce the fixed manufacturing overhead to the lowest possible ratio of machine hours in order to calculate the contribution margin per machine hour. Example: 8:4 would be 2:1. Enter the amounts to the nearest cent.) Model 9 Model 14 Data Table Contribution margin per unit %3D A B Per Unit Contribution margin per machine hour Model 9 Model 14 Fitness Gym, Inc. should produce: 3 Selling price $ 125.00 $ 90.00 O A. Both Model 9 and Model 14 since both models provide positive contribution margins. 4 Costs O B. Model 14, since this model results in the higher contribution margin per machine hour. 29.00 16.00 Direct material Variable direct manufacturing 5 OC. Model 9, since this model results in the contribution margin per unit. 6 labor 12.00 20.00 O D. Model 9, since this model results in the higher operating income per unit. 7 Variable manufacturing overhead 22.00 11.00 8 Fixed manufacturing overhead* 12.00 6.00 9 Marketing (all variable) 15.00 11.00 10 Total costs 90.00 64.00 11 Operating income 2$ 35.00 S 26.00 12 *Allocated on the basis of machine-hours Print Done

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Fitness Gym, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows:
E (Click the icon to view the data.)
The weight-lifting craze suggests that Fitness Gym can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same
production departments.
Read the requirements.
Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin per machine hour for each machine. (Reduce the fixed manufacturing
overhead to the lowest possible ratio of machine hours in order to calculate the contribution margin per machine hour. Example: 8:4 would be 2:1. Enter the amounts to the nearest cent.)
Model 9
Model 14
Data Table
Contribution margin per unit
A
В
1
Per Unit
Contribution margin per machine hour
Model 9
Model 14
Fitness Gym, Inc. should produce:
3 Selling price
$
125.00 $
90.00
A. Both Model 9 and Model 14 since both models provide positive contribution margins.
4 Costs
B. Model 14, since this model results in the higher contribution margin per machine hour.
Direct material
29.00
16.00
C. Model 9, since this model results in the higher contribution margin per unit.
Variable direct manufacturing
labor
12.00
20.00
D. Model 9, since this model results in the higher operating income per unit.
7
Variable manufacturing overhead
22.00
11.00
8
Fixed manufacturing overhead*
12.00
6.00
9.
Marketing (all variable)
15.00
11.00
10
Total costs
90.00
64.00
11 Operating income
35.00 $
26.00
12 *Allocated on the basis of machine-hours
Print
Done
Transcribed Image Text:Fitness Gym, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows: E (Click the icon to view the data.) The weight-lifting craze suggests that Fitness Gym can sell enough of either Model 9 or Model 14 to keep the plant operating at full capacity. Both products are processed through the same production departments. Read the requirements. Before determining which products to produce, let's calculate the contribution margin per unit and the contribution margin per machine hour for each machine. (Reduce the fixed manufacturing overhead to the lowest possible ratio of machine hours in order to calculate the contribution margin per machine hour. Example: 8:4 would be 2:1. Enter the amounts to the nearest cent.) Model 9 Model 14 Data Table Contribution margin per unit A В 1 Per Unit Contribution margin per machine hour Model 9 Model 14 Fitness Gym, Inc. should produce: 3 Selling price $ 125.00 $ 90.00 A. Both Model 9 and Model 14 since both models provide positive contribution margins. 4 Costs B. Model 14, since this model results in the higher contribution margin per machine hour. Direct material 29.00 16.00 C. Model 9, since this model results in the higher contribution margin per unit. Variable direct manufacturing labor 12.00 20.00 D. Model 9, since this model results in the higher operating income per unit. 7 Variable manufacturing overhead 22.00 11.00 8 Fixed manufacturing overhead* 12.00 6.00 9. Marketing (all variable) 15.00 11.00 10 Total costs 90.00 64.00 11 Operating income 35.00 $ 26.00 12 *Allocated on the basis of machine-hours Print Done
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Techniques of Time Value Of Money
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education