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Planet Fit​, ​Inc., produces two basic types of​ weight-lifting equipment, Model 9 and Model 14. Pertinent data are as​ follows: LOADING... ​(Click the icon to view the​ data.) The​ weight-lifting craze suggests that Planet Fit 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 LOADING... .   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         -       = Contribution margin per unit     ÷       = Contribution margin per machine hour     Planet Fit​, Inc. should​ produce:     A. Model 9​, since this model results in the higher contribution margin per unit.   B. Both Model 9 and Model 14 since both models provide positive contribution margins.   C. Model 9​, since this model results in the higher operating income per unit.   D. Model 14​, since this model results in the higher contribution margin per machine hour.

Planet Fit​, ​Inc., produces two basic types of​ weight-lifting equipment, Model 9 and Model 14. Pertinent data are as​ follows: LOADING... ​(Click the icon to view the​ data.) The​ weight-lifting craze suggests that Planet Fit 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 LOADING... .   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         -       = Contribution margin per unit     ÷       = Contribution margin per machine hour     Planet Fit​, Inc. should​ produce:     A. Model 9​, since this model results in the higher contribution margin per unit.   B. Both Model 9 and Model 14 since both models provide positive contribution margins.   C. Model 9​, since this model results in the higher operating income per unit.   D. Model 14​, since this model results in the higher contribution margin per machine hour.

Accounting Information Systems
Accounting Information Systems
11th Edition
ISBN:9781337552127
Author:Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan Hill
Publisher:Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan Hill
Chapter15: Integrated Production Processes (ipps)
Section: Chapter Questions
Problem 3P
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Question
Planet Fit​,
​Inc., produces two basic types of​ weight-lifting equipment, Model 9 and Model 14. Pertinent data are as​ follows:
LOADING...
​(Click
the icon to view the​ data.)
The​ weight-lifting craze suggests that
Planet Fit
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
LOADING...
.
 
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
 
 
 
 
-
 
 
 
=
Contribution margin per unit
 
 
÷
 
 
 
=
Contribution margin per machine hour
 
 
Planet Fit​,
Inc. should​ produce:
 
 
A.
Model 9​,
since this model results in the higher contribution margin per unit.
 
B.
Both Model 9 and Model 14 since both models provide positive contribution margins.
 
C.
Model 9​,
since this model results in the higher operating income per unit.
 
D.
Model 14​,
since this model results in the higher contribution margin per machine hour.
i Data Table - X A. B 1 Per Unit 2 Model 9 Model 14 3 Selling price 120.00 $ 115.00 $ 4 Costs 5 Direct material 27.00 10.00 Variable direct manufacturing 6. labor 13.00 26.00 7 Variable manufacturing overhead 21.00 10.50 8. Fixed manufacturing overhead* 7.00 3.50 Marketing (all variable) 12.00 5.00 9. 10 Total costs 80.00 55.00 $ 40.00 $ 60.00 11 Operating income 12 *Allocated on the basis of machine-hours Print Done
Transcribed Image Text:i Data Table - X A. B 1 Per Unit 2 Model 9 Model 14 3 Selling price 120.00 $ 115.00 $ 4 Costs 5 Direct material 27.00 10.00 Variable direct manufacturing 6. labor 13.00 26.00 7 Variable manufacturing overhead 21.00 10.50 8. Fixed manufacturing overhead* 7.00 3.50 Marketing (all variable) 12.00 5.00 9. 10 Total costs 80.00 55.00 $ 40.00 $ 60.00 11 Operating income 12 *Allocated on the basis of machine-hours Print Done
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