Question

Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours, Total market demand for the two products is limited to 190 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes. Alpha $ 124 Delta S 154 Total Price Less variable costs per unit Material Labor Overhead Contribution margin per unit Fixed costs Manufacturing Marketing and administrative 19.5 24.5 16 32.5 37.5 18 $ 7,100 $ 4,100 $11,200 2.0 2.5 495 Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit 110 11 190 190 $3,100

Answer 1

a. Alpha 64/2 = 32.00 per hour

Delta 66/ 2.5= 26.40 per hour

Alpha 380 hours /2= 190

Delta 120 hours/2.5 = 48

b. After Profit =$ 4,128

Before Profit =$ 3,100

Current profit that will increase = $1,028