Question

Service Emphasis
The following analysis of selected data is for each of the two services Rockville Corporation provides.

				Service G	Service H
Per-unit data at 10,000 services
Sales price				$28	$15
Service costs:
Variable				11	7
Fixed				6	4
Selling and administrative expenses:
Variable				5	2
Fixed				3	1

In the Rockville's operation, labor capacity is the company's constraining resource. Each unit of G requires 3 hours of labor, and each unit of H requires 1 hours of labor. Assuming that all services can be sold at a normal price, prepare an analysis showing which of the two services should be provided with any unused productive capacity that Rockville might have.

	Service
	G	H
Revenue	$Answer	$Answer
Less: Variable cost	Answer	Answer
Contribution margin	$Answer	$Answer
Labor hours per unit	Answer	Answer
Contribution margin per labor hour	$Answer	$Answer

Any unused capacity should be devoted to Service H, which has $2 less contribution margin per labor hour than does Service G.

Any unused capacity should be devoted to Service G, which has $2 more contribution margin per labor hour than does Service H.

Any unused capacity should be devoted to Service H, which has $2 more contribution margin per labor hour than does Service G.

QUESTION 5 Not complete Points out of 2.00 P Flag question Service Emphasis The following analysis of selected data is for each of the two services Rockville Corporation provides. Service G Service H Per-unit data at 10,000 services Sales price Service costs: $28 $15 Variable E Fixed o AN Selling and administrative expenses: Variable un Fixed w In the Rockville's operation, labor capacity is the company's constraining resource. Each unit of Grequires 3 hours of labor, and each unit of H requires 1 hours of labor. Assuming that all services can be sold at a normal price, prepare an analysis showing which of the two services should be provided with any unused productive capacity that Rockville might have. Service Revenue Less: Variable cost Contribution margin Labor hours per unit Contribution margin per labor hour $ O Any unused capacity should be devoted to Service H, which has $2 less contribution margin per labor hour than does Service G. OAny unused capacity should be devoted to Service G, which has $2 more contribution margin per labor hour than does Service H. O Any unused capacity should be devoted to Service H, which has $2 more contribution margin per labor hour than does Service G.

Answer 1

Calculate contribution margin per labour hour :

	G	H
Revenue	28	15
Less: Variable cost	16	9
Contribution margin	12	6
Labour hour per unit	3	1
Contribution margin per labour hour	4	6

So answer is c) Any unused capacity should be devoted to service , Which has $2 more contribution margin per labour hour than does service G.