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Edge Company produces two models of its product with the same machine. The machine has a capacity of 148 hours per month. The following information
Edge Company produces two models of its product with the same machine. The machine has a capacity of 148 hours per month. The following information is available. Selling price per unit Standard $ 110 Deluxe $140 40 84 $56 1 hour 500 units 2 hours 250 units Variable costs per unit Contribution margin per unit Machine hours per unit Maximum unit sales per month $ 70 Required: 1 Determine the contribution margin per machine hour for each model Product Contribution Margin Standard Deluxe Contribution margin per unit 70 $ 56 Machine hours per unit 1 2 Contribution margin per machine hour 70 $ 28 2 How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total Hours dedicated to the production of each product 148 0 148 Units produced for most profitable sales mix 148 0 Contribution margin per unit 70 56 Total contribution margin S 10,360 $ 0 $ 10,360 3. Assume the maximum demand for the Standard model is 70 units (not 500 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Machine hours per unit Maximum unit sales per month Required: 1 hour 2 hours 500 units 250 units 1. Determine the contribution margin per machine hour for each model Product Contribution Margin Standard Deluxe Contribution margin per unit 70 $ 56 Machine hours per unit 1 2 Contribution margin per machine hour 70 $ 28 2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Standard Deluxe Total Hours dedicated to the production of each product 148 0 148 Units produced for most profitable sales mix 148 0 Contribution margin per unit 70 56 Total contribution margin $ 10,360 $ $ 10,360 3. Assume the maximum demand for the Standard model is 70 units (not 500 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month? Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin Standard 70 70 70.00 $ 4,900 Deluxe Total 70
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