12 Edgerron Company is able to produce two products, G and B. with the same machine in its factory. The following information is available, 15 points Selling price per unit Variable costa per unit Contribution margin per unit Machine hours to produce 1 unit Maximum unit sales per month Product $ 110 40 5 70 0.4 hours 500 units Product $ 140 14 $ 56 1.0 hours 250 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month This change would require $7.000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.) Answer is not complete. 1. Determine the contribution margin per machine hour that each product generates Product Products Contribution margin per unit 70.00 $ 56.00 Machine hours per unit 0.4 10 Contribution margin per machine hour $ 175003 56.00 Product Products Total ER 2. How many units of Product G and Product B should the company produce if it continues to operate with only one shift? How much total contribution margin does this mix produce each month? Product G Product B Total Hours dedicated to the production of each product 176 176 Units produced for most profitable sales mix 440 Contribution margin per unit $ 70.00 $ 0.00 Total contribution margin-one shift $ 30,800 3. If the company adds another shift, how many units of Product G and Product B should it produce? How much total incremental income would this mix produce each month? Should the company add the new shift? Product G Product B Total Hours dedicated to the production of each product 176% 176 Units produced for most profitable sales mix 440 Contribution margin per unit $ 70.00 Total contribution margin-two shifts $ 30,800 + Total incremental income WHE land 12 15 points 4. Suppose the company determines that it can increase Product G's maximum sales to 600 units per month by spending $6,000 per month in marketing efforts. Should the company pursue this strategy and the double shift Compute total incremental income Producto Product B Total Second shift without marketing campaign Units produoed for most profitable sales mix Contribution margin per unit Contribution margin 0 $ 0 112 240 X 70.00 16,800 $ $ 56.00 6,272 $ Second shift with marketing campaign: Units produced for most profitable sales mix Contribution margin per unit Contribution margin Additioeffixed costs Additional marketing costs Incremental income Change in incremental income $ $ $ $ 48,272 43,512X 4,760 6,000