Question

Product G $ 50 Product B $ 80 10 Selling price per unit Variable costs per unit Contribution margin per unit Machine hours to produce 1 unit Maximum unit sales per month S 40 $ 32 0.4 hours 600 units 1.0 hours 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 $4,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)

Answer 1

Solution 4 Particulars Product G Product B Total amount($) 280 700 72 72 $32 $2,304 $40 $28,000 Allocated hours for Each unit Units produced fo the most profitable sales mix Contribution per Unit - Two Shift & Mkt. Campaign Total Margin - Two Shifts without Mkt. Campaign Change in Contribution Margin Additional Marketing Costs Change in Fixed Costs Change in operating income (Loss) Should the company pursue the Marketing Campaign $30,304 $27,584 $2,720 $3,000 $4,000 ($4,280)