Exercise 6-13 Helena Company manufactures and sells two products. Relevant per u
ID: 2448690 • Letter: E
Question
Exercise 6-13 Helena Company manufactures and sells two products. Relevant per unit data concerning each product follow. Compute the contribution margin per machine hour for each product. (Round answers to 0 decimal places, e.g. 5,275.) If 1,080 additional machine hours are available, which product should Helena manufacture? D Calculate total contribution margin if the additional 1,080 hours are: (Round intermediate calculation and final answers to 0 decimal places, e.g. 5,275.) (1) Divided equally between the products. (2) Allocated entirely to the product identified above.Explanation / Answer
Answer:
If 1080 additional machine hours are available, Helena should manufacture product "Basic" as contribution margin per machine hour of product "Basic" is higher than product "Delux".
Description Basic ($) Delux ($) Selling Price 42.00 52.00 Variable Costs 14.70 27.50 a. Contribution (Selling Price - Variable Costs) 27.30 24.50 b. Machine hours 0.70 0.70 Contribution per machine hour a/b 39.00 35.00