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PLEASE HELP !! Thank you Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following
PLEASE HELP !! Thank you
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 $ 160 65 $ 95 Product B $ 190 114 Selling price per unit Variable costs per unit Contribution margin per unit Machine hours to produce 1 unit Maximum unit sales per month $ 76 0.4 hours 550 units 1.0 hours 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 $9,500 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.) 132 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 220 352 Units produced for most profitable sales mix 550 132 Contribution margin per unit $ 95.00 $ 76.00 Total contribution margin-two shifts $ 52,250 $ 10,032 $ 62,282 Total contribution margin-one shift 41,800 Change in contribution margin 20,482 Change in fixed costs 9,500 Change in operating incomeloss) 10,982 Total incremental income Should the company add another shift? Yes $ 4. Suppose the company determines that it can increase Product G's maximum sales to 600 units per month by spending $8,500 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 Contribution margin per unit Contribution margin Additional fixed costs Incremental income 550 95.00 52,250 s 132 76.00 10,032 A $ $ 62,282 9.500 $ 112 $ Second shift with marketing campaign: Units produced for most profitable sales mix Contribution margin per unit Contribution margin Additional fixed costs Additional marketing costs Incremental income 600 95.00 57,000 $ $ 76.00 8,512 $ $ $ 65,512 9,500 8,500 $Step by Step Solution
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