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 $ 90 $ 120 Selling price per unit Variable costs per unit 30 72 Contribution margin per unit $ 60 $ 48 Machine hours to produce 1 0.4 hours 1 hours unit Maximum unit sales per month 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 $6,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place.)
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 $ 90 $ 120 Selling price per unit Variable costs per unit 30 72 Contribution margin per unit $ 60 $ 48 Machine hours to produce 1 0.4 hours 1 hours unit Maximum unit sales per month 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 $6,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place.)
Chapter10: Short-term Decision Making
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Problem 12EB: Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes...
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Hello, I'm only looking for help with number 4. I managed to get 1-3 but it won't let me attach that screenshot.
Transcribed Image Text:3. If the company adds another shift, how many units of Product G and Product B should it produce? How much total
contribution margin would this mix produce each month?
Product G
Product B
Total
Hours dedicated to the production of each product
240
240
Units produced for most profitable sales mix
600
Contribution margin per unit
60.00
$
$
Total contribution margin-two shifts
36,000
4. Suppose that the company determines that it can increase Product G's maximum sales to 700 units per month by
spending $5000 per month in marketing efforts. Should the company pursue this strategy and the double 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 and marketing campaign
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
$ 90
$ 120
Selling price per unit
Variable costs per unit
30
72
Contribution margin per unit
$ 60
$ 48
Machine hours to produce 1
unit
0.4 hours
1 hours
Maximum unit sales per
month
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 $6,000 additional fixed costs per month. (Round hours per
unit answers to 1 decimal place.)
1. Determine the contribution margin per machine hour that each product generates.
Product B
Product G
$
Contribution margin per unit
48.00
Machine hours per unit
1.0
Contribution margin per machine hour
48.00
Product G
Maximum number of units to be sold
600
200
Hours required to produce maximum units
240
200
440
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
176
440
60.00 $
Contribution margin per unit
Total contribution margin - one shift
$
60.00 $
0.4
$
26,400
Product B
0
0
0.00
$
Total
176
26,400
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