Question

The following information applies to the products of Rooney Company: Product Product Selling price per unit Variable cost per unit $13 11 $14 Identify the product that should be produced or sold under each of the following constraints. Consider each constraint separately. Required a. One unit of Product Arequires 2 hours of labor to produce, and one unit of Product B requires 5 hours of labor to produce. Due to labor constraints, demand is higher than the company's capacity to make both products. b. The products are sold to the public in retail stores. The company has limited floor space and cannot stock as many products as it would like. Display space is available for only one of the two products. Expected sales of Product A and Product B are 12,000 units and 9,000 units, respectively. c. The maximum number of machine hours available is 48,000. Product A uses 2 machine hours, and Product Buses 8 machine hours. The company can sell all the products it produces Complete this question by entering your answers in the tabs below. Required A Required B Required One unit of Product A requires 2 hours of labor to produce, and one unit of Product requires 5 hours of labor to produce. Due to labor constraints, demand is higher than the company's capacity to make both products. (Round your answers to 2 decimal places.) Product B Product Contribution margin per labor hour Which product should be produced? Required >

Answer 1

B7 | X ✓ fx A A B C selling price per unit variable cost per unit contribution margin per unit product A $ 13.00 $ 11.00 $ 2.00 product B $ 14.00 $ 10.00 $ 4.00 product A product B contribution margin per unit $ 2.00 $4.00 labor hours per unit contribution margin per labor hour $ 1.00 $0.80 which product should be produced? product A reason - because of higher contribution margin per labor hour product A product B contribution margin per unit $2.00 $ 4.00 total sales units 12,000 9,000 total contribution margin $ 24,000.00 $ 36,000.00 which product should be produced? product B reason because of higher total contribution margin product A product B contribution margin per unit $ 2.00 $ 4.00 machine hours per unit contribution margin per machine hour $1.00 $0.50 which product should be produced? product A reason - because of higher contribution margin per machine hour

for formulas and calculations, refer to the image below -

| EX ✓ fx A A B C F G selling price per unit variable cost per unit contribution margin per unit product A product B 13 14 11 =E3-E4 =F3-F4 product A product B contribution margin per unit =E5 =F5 labor hours per unit contribution margin per labor hour [=E8/E9 =F8/F9 which product should be produced? product A reason-because of higher contribution margin per labor hour product A product B contribution margin per unit =E5 =F5 total sales units 12000 9000 total contribution margin =E15*E16 =F15*F16 which product should be produced? product B reason - because of higher total contribution margin product A product B contribution margin per unit -E5 =F5 machine hours per unit contribution margin per machine hour =E22/E23 =F22/F23 which product should be produced? product A pason - because of higher contribution margin per machine hoy