Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available.

	Product G					Product B
Selling price per unit			$	140				$	170
Variable costs per unit				55					102
Contribution margin per unit			$	85				$	68
Machine hours to produce 1 unit		0.4	hours				1.0	hours
Maximum unit sales per month		500	units				200	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 $8,500 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)

1. Determine the contribution margin per machine hour that each product generates.
	Product G	Product B
Contribution margin per unit	$85.00	$68.00
Machine hours per unit	0.4	1.0
Contribution margin per machine hour	$212.50	$68.00
	Product G	Product B	Total
Maximum number of units to be sold	500	200
Hours required to produce maximum units	200	200	400
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	0	176
Units produced for most profitable sales mix	440	0
Contribution margin per unit	$85.00	$0.00
Total contribution margin - one shift	$37,400		$37,400
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	200	152	352
Units produced for most profitable sales mix	500	152
Contribution margin per unit	$85.00	$68.00
Total contribution margin - two shifts	$42,500	$10,336	$52,836
Total contribution margin - one shift			37,400
Change in contribution margin			15,436
Change in fixed costs			8,500
Change in operating income(loss)			$6,936
Total incremental income			$44,336
Should the company add another shift?	Yes
4. Suppose the company determines that it can increase Product Gs maximum sales to 600 units per month by spending $7,500 per month in marketing efforts. Should the company pursue this strategy and the double shift? Compute total incremental income.
	Product G	Product B	Total
Second shift without marketing campaign:
Units produced for most profitable sales mix	500	152
Contribution margin per unit	$85.00	$68.00
Contribution margin	$42,500	$10,336	$52,836
Additional fixed costs			$8,500
Incremental income			$44,336
Second shift with marketing campaign:
Units produced for most profitable sales mix	600
Contribution margin per unit	$85.00
Contribution margin	$51,000	$0
			$8,500
Additional marketing costs			$7,500
Incremental income
	No