Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Peller Co. manufactures two tables, Small and Large. Machine hour capacity is 8,000 hours per year. Total fixed costs are $19,600. Product information is provided
Peller Co. manufactures two tables, Small and Large. Machine hour capacity is 8,000 hours per year. Total fixed costs are $19,600. Product information is provided below: Small Large Unit selling price $100 $210 Unit costs: Variable manufacturing (50) (120) Fixed manufacturing (10) (15) Variable selling and administrative (18) (18) Unit profit $ 22 $ 57 Demand in units Machine hours per unit 1,000 4 600 10 Required: (Show all your computations.) a. Which table has the higher contribution margin per unit? b. Which table has the higher contribution margin per machine hour? c. How many tables of each size should be produced using the short-run profit maximizing strategy, and what is the maximum operating income? d. If there are 11,000 machine-hours available per year, how many tables of each size should Peller Co. produce to maximize profits? What is the maximum contribution margin
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started