Problem 23-5A Analysis of sales mix strategies LO A1 Edgerron Company is able to produce two products, 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 Producto $ 240 105 $ 135 8.4 hours 650 units Products $ 270 162 $ 108 1.0 hours 250 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 $13,500 additional fixed costs per month (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, os negative values.) 1 Determine the contribution margin per machine hour that each product generates Product G Contribution margin per unit 13500 Machine hours per unit Contribution margin Dermachine bour Product B 108.00 Product B 5 108.00 1. Determine the contribution margin per machine hour that each product generates. Product G Contribution margin per unit $ 135.00 Machine hours per unit Contribution margin per machine hour Product G Maximum number of units to be sold 650 Houts required to produce maximum units Product B Total 250 2 How many units of Product G and Product B should the company produce if it continues to operate with only one shit? How much total contribution margin does this mix produce each month? Product G Product B Total Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin par unit Total contribution margin-one shift 30 the company adds another thin how many units of Product G and Product B should it produce? How much total contribution margin would this mix produce each month? Product G Product B Total 3. If the company adds another shift, how many units of Product G and Product B should it produce? How much total contribution margin would this mix produce each month? Product G Product B Total Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin-two shifts 4 Suppose that the company determines that it can increase Product G s maximum sales to 700 units per month by spending $12.500 per month in marketing efforts Should the company pursue this strategy and the double shift? Product Product B Total Hours dedicated to the production of each product Units produced for most profitable sales mby Contribution margin per unit 4. Suppose that the company determines that it can increase Product G's maximum sales to 700 units per month by spending $12,500 per month in marketing efforts. Should the company pursue this strategy and the double shift? Product G Product B Total Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin-two shifts and marketing campaign
