Question

Question 7 Xcelerate Productions Limited manufactures and sells three different products of different qualities. They are referred to as: Normal, High, and Superior. The accounting department provides the following information on these products: Variable costs per unit Contribution margin per unit Machine hours required Normal $31.00 $26.00 $5.00 0.02 High $42.00 $35.00 $7.00 0.04 Superior $52.00 $48.00 $4.00 0.08 Determine the contribution margin per machine hour. (Round answers to 2 decimal places, e.g. 15.25.) Contribution Margin Normal per machine hour High per machine hour Superior per machine hour LINK TO TEXT If the limited resource can be increased by 770 hours, calculate the maximum increase in contribution margin. Assume that Xcelerate can sell all products manufactured. Increase in contribution margin $ LINK TO TEXT Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Ans:

Requirement 1

Solution

Normal	$ 250.00	Per machine hour
High	$ 175.00	Per machine hour
Superior	$    50.00	Per machine hour

Working

		Normal	High	Superior
A	Contribution margin per unit	$       5.00	$       7.00	$       4.00
B	Machine hour required per unit	0.02	0.04	0.08
C=A/B	Contribution margin per Machine Hour	$ 250.00	$ 175.00	$    50.00

Requirement 2

Increase in contribution margin= $192,500

Additional machine hours should be used in producing product that gives highest contribution per machine hour.

Additional machine hours	770
Units to be produced of Product normal (770/0.02)	38500
Contribution increase =Contribution per unit x Additional units produced (38500 x $5)	$ 1,92,500.00