Question
Kenari Cookies Enterprise manufactures three different product lines of cookies, Chocolate, Double Chocolate and Strawberry, which are packed in a 100-unit box. Considerable market demand
Kenari Cookies Enterprise manufactures three different product lines of cookies, Chocolate, Double Chocolate and Strawberry, which are packed in a 100-unit box. Considerable market demand exists for all product lines. The following per unit data (box) apply:
Chocolate (RM) | Double Chocolate (RM) | Strawberry (RM) | |
Selling price | 170.00 | 190.00 | 210.00 |
Direct materials | 60.00 | 60.00 | 60.00 |
Direct labor (RM20 per hour) | 30.00 | 30.00 | 40.00 |
Variable support costs (RM10 per machine-hour) | 10.00 | 20.00 | 20.00 |
Fixed support costs | 40.00 | 40.00 | 40.00 |
REQUIRED:
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For each box, compute the contribution margin per unit.
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For each box, compute the contribution margin per machine-hour.
if there is excess capacity, which product line is the most profitable to produce? Explain your answer.
If there is a machine breakdown, which product line is the most profitable to produce? Explain your answer.
Suggest two (2) ways how Kenari Cookies Enterprise should encourage its sales people to promote the more profitable product.
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