Ivanhoe Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Ivanhoe is currently operating at full capacity with limited machine time. Sales and production information relevant to each model is as follows: Product Economy Standard Deluxe Selling price $31.00 $53.20 $97.90 Variable costs and expenses $13.50 $18.00 $41.50 Machine hours required 0.50 0.80 1.60 Ignoring the machine time constraint, which single product should Ivanhoe Industries produce? Ivanhoe Industries should produce select a product . What is the contribution margin per unit of limited resource for each product? (Round answers to 2 decimal places, e.g. 15.75.) Model Contribution Margin Economy $enter a dollar amount per machine hour per machine hour Standard $enter a dollar amount per machine hour per machine hour Deluxe $enter a dollar amount per machine hour per machine hour If it could obtain additional machine time, how should the company use the additional time? Additional machine time should be used to produce the select a product

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

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Ivanhoe Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Ivanhoe is currently operating at full capacity with limited machine time. Sales and production information relevant to each model is as follows:

	Product
	Economy	Standard	Deluxe
Selling price	$31.00	$53.20	$97.90
Variable costs and expenses	$13.50	$18.00	$41.50
Machine hours required	0.50	0.80	1.60

Ignoring the machine time constraint, which single product should Ivanhoe Industries produce?

Ivanhoe Industries should produce select a product .

What is the contribution margin per unit of limited resource for each product? (Round answers to 2 decimal places, e.g. 15.75.)

Model	Contribution Margin
Economy	$enter a dollar amount per machine hour	per machine hour
Standard	$enter a dollar amount per machine hour	per machine hour
Deluxe	$enter a dollar amount per machine hour	per machine hour

If it could obtain additional machine time, how should the company use the additional time?

Additional machine time should be used to produce the select a product .

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