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 $230 $260

Variable costs per unit 100 156

Contribution margin per unit $130 $104

Machine hours to produce 1 unit 0.4hours 1.0hours

Maximum unit sales per month 650units 250units

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 $13,000 additional fixed costs per month.(Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)

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? Hours dedicated to the production of each product Units produced for most protable sales mix Contribution margin per unit $ 130.00 $ 104.00 Total contribution margin - two shifts $ 84,500 $ 9.568 $ 94,068 _ _ _ 4. Suppose the company determines that it can increase Product G's maximum sales to 700 units per month by spending $12,000 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 700 Contribution margin per unit 130.00 Contribution margin 91,000 $ 0 $ 13,000 Incremental income Second shift with marketing campaign: Units produced for most profitable sales mix 700 72 Contribution margin per unit 130.00 $ 104.00 Contribution margin $ 91,000 $ 7,488 $ 98,488 Additional fixed costs 13,000 Additional marketing costs $ 12,000 Incremental income $ 73,488 Change in incremental income No1. Determine the contribution margin per machine hour that each product generates. Product G Product B Contribution margin per unit $ 130.00 $ 104.00 Machine hours per unit 0.4 1.0 Contribution margin per machine hour $ 325.00 $ 104.00 Product G Product B Total Maximum number of units to be sold 650 250 Hours required to produce maximum units 260 250 510 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 $ 130.00 $ 0.00 Total contribution margin - one shift $ 57,200 $ 57,200