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

Selling price per unit Variable costs per unit Contribution margin per unit Machine hours to produce 1 unit Maximum unit sales per month Product G $230 100 $130 0.4 hours 650 units Product B S 260 156 $ 104 1.0 hours 250 units 1. Determine the contribution margin per machine hour that each product generates. Contribution margin per unit $ 130.00 9 $ 104.00 9 Contribution margin per machine hour $ 325.00 0 $ 104.00 0 Hours required to produce maximum units 260 Q 250 a 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? Hours dedicated to the production of each product 176 Q 0 o 176 Units produced for most protable sales mix 440 o 0 0 Contribution margin per unit $ 130.00 a $ 0.00 a Total contribution margin - one shift $ 57 200 $ 57,200 0 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? 03 01 ['0 Hours dedicated to the production of each product Units produced for most protable sales mix '59 O) N 01 03 D O 'l 30.00 $ 1 04.00 84,500 $ 9,568 Contribution margin per unit 9-: $ 94,068 9 57,200 36,868 9 13,000 9 $ 23,868 9 $ 98,008 9 Total contribution margin - two shifts Total contribution margin - one shift Change in contribution margin Change in xed costs Change in operating income(loss) Total incremental income to (O N ['0 Should the company add another shift? 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. Second shift without marketing campaign: Units produced for most protable sales mix s] M II Contribution margin per unit $ Contribution margin Additional xed costs Incremental income 5] 0.7 to Second shift with marketing campaign: Units produced for most protable sales mix Contribution margin per unit 130.00 _ s Should the company pursue this strategy and the double shift? No 0 '4 O D '69