Posted by Dean on Monday, April 30, 2012 at 5:53pm.
Spencer Company manufactures and sells three products. Relevant per unit data concerning each product are given below.
Product
A
B
C
Selling price $9 $12 $14
Variable costs and expenses $3 $9.50 $12
Machine hours to produce 2 1 2
Compute the contribution margin per unit of the limited resource (machine hour) for each product. (Round answers to 2 decimal places, e.g. 10.50.)
Product A $
Product B $
Product C $
Assuming 1,500 additional machine hours are available, which product should be manufactured?
Prepare an analysis showing the total contribution margin if the additional hours are (1) divided equally among the products, and (2) allocated entirely to the product identified in (b) above. (Round contribution margin to 2 decimal places, e.g. 10.50.)
Divided equally among the products:
Product
A
B
C
Machine hours
Contribution margin per unit
of limited resource
$
$
$
Total contribution margin
$
$
$
The total contribution margin is $.
Allocated entirely to the product identified in the section above.
Machine hours
Contribution margin per unit of limited resource
$
Total contribution margin
$
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