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Contributon margin per constraint Chavez Chemical Company produces three products: ethylene, butane, and ester. Each of these products has high demand in the market, and Chavez Chemical is able to sell as much as it can produce of all three. The reaction operation is a bottleneck in the process and is running at 100% of capacity. Chavez Chemical wants to improve chemical operation profitability. The variable conversion cost is $20 per process hour. The fixed cost is $550,000. In addition, the cost analyst was able to determine the following information about the three products: The reaction operation is part of the total process for each of these three products. Thus, for example. 1.0 of the 6 hours required to process ethylene is associated with the reactor. Instructions Determine the unit contribution margin for each of the three products.

BuyFind

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883
BuyFind

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

Solutions

Chapter
Section
Chapter 12, Problem 12.5.1MBA
Textbook Problem

Contributon margin per constraint

Chavez Chemical Company produces three products: ethylene, butane, and ester. Each of these products has high demand in the market, and Chavez Chemical is able to sell as much as it can produce of all three. The reaction operation is a bottleneck in the process and is running at 100% of capacity. Chavez Chemical wants to improve chemical operation profitability. The variable conversion cost is $20 per process hour. The fixed cost is $550,000. In addition, the cost analyst was able to determine the following information about the three products:

Chapter 12, Problem 12.5.1MBA, Contributon margin per constraint Chavez Chemical Company produces three products: ethylene, butane,
The reaction operation is part of the total process for each of these three products. Thus, for example. 1.0 of the 6 hours required to process ethylene is associated with the reactor.

Instructions

Determine the unit contribution margin for each of the three products.

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Chapter 12 Solutions

Survey of Accounting (Accounting I)
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