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QUESTION 4 Drew Incorporated produces three products. Data concerning the selling prices and unit costs of the three products appear below: Selling price Variable costs
QUESTION 4 Drew Incorporated produces three products. Data concerning the selling prices and unit costs of the three products appear below: Selling price Variable costs Fixed costs Milling machine time (minutes) F $75 $45 $35 10 Product G $55 $35 $8 H $85 $50 $32 4 5 Fixed costs are applied to the products on the basis of direct labor hours. Demand for the three products exceeds the company's productive capacity. The milling machine is the constraint, with only 2,600 minutes of milling machine time available this week. Required: Show your work 120 points a. What is the contribution margin per unit and the contribution margin ratio for each product? b. What is the contribution margin per minute for each product? c. Given the milling machine constraint, which product should be emphasized? d. Assuming that there is still unfilled demand for the product that the company should emphasize, up to how much should the company be willing to pay for an additional hour of milling machine time? e. Assume the following information instead: the company would devote 35% of the milling machine time to products Hand G, with the remaining 30% devoted to product F. What will the total contribution margin be under this scenario
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