Refer to the information for Comfy Fit Company above. Assume that there are no other constraints. Comfy
Question:
Comfy Fit Company manufactures two types of university sweatshirts, the Swoop and the Rufus, with unit contribution margins of $ 5 and $ 15, respectively. Regardless of type, each sweatshirt must be fed through a stitching machine to affix the appropriate university logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Swoop sweatshirt requires 6 minutes of machine time, and each Rufus sweatshirt requires 20 minutes of machine time.
Required:
1. What is the contribution margin per hour of machine time for each type of sweatshirt?
2. What is the optimal mix of sweatshirts?
3. What is the total contribution margin earned for the optimal mix? Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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1 Swoop Rufus Contribution margin per unit 5 15 Required machine time per unit 010 033 Contribution ...View the full answer
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Related Book For 
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
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