Question

Juda Company sells both designer and moderately priced fashion accessories. Top management is deciding which product line to emphasize. Accountants have provided the foilowing data (Click the icon to view the data.) Prepare an analysis to show which product the company should emphasize. (Enter the units displayed per square foot and the contribution margin per square foot to two decimal places.) Product Designer Moderately Priced Units displayed per square foot Designer Moderately priced Contribution margin per unit Contribution margin per square foot of display space Capacity-Square feet of display space Total contribution margin at capacity Decision:

Answer 1

	Designer	Moderately priced
Units displayed per square foot:
Designer	450/15,000 = 0.03
Moderately priced		1,050/15,000 = 0.07
Contribution margin per unit	115	58
Contribution margin per square foot of display space	115 x 0.03 = 3.45	58 x 0.07 = 4.06
Capacity square feet of display space	15,000	15,000
Total contribution margin at capacity	15,000 x 3.45 = $51,750	15,000 x 4.06 = $60,900

Decision: Emphasize Moderately priced goods

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