The Tronic Tool Company has two products: a plain circular saw and a professional circular saw. The plain saw sells for $75 and has a variable cost of $15. The professional saw sells for $120 and has a variable cost of $55. Requirements 1. Compute contribution margins and contribution-margin ratios for plain and professional saws. 2. The demand is for more units than the company can produce. There are only 20,000 machine hours of manufacturing capacity available. Two plain saws can be produced in the same average time (1 hour) needed to produce one professional saw. Compute the total contribution margin for 20,000 hours for plain saws only and for professional saws only. Which product is the best use of machine hours? 3. Use two or three sentences to state the major lesson of this problem. Requirement 2. The demand is for more units than the company can produce. There are only 20,000 machine hours of manufacturing capacity available. Two plain saws can be produced in the same average time (1 hour) needed to produce one professional saw. Compute the total contribution margin for 20,000 hours for plain saws only and for professional saws only. Which product is the best use of machine hours? Begin by selecting the formula and entering the amounts to compute the total contribution margin for 20,000 hours for plain saws only and for professional saws only. Total contribution margin X Plain x II Professional Il The Moonlight Chemical Company produced three joint products at a joint cost of $111,000. These products were processed further and sold as follows. (Click the icon to view the data.) The company has had an opportunity to sell at split-off directly to other processors. If that alternative had been selected, sales would have been A, $55,000; B, $36,000; and C, $54,000. The company expects to operate at the same level of production and sales in the forthcoming year. Consider all the available information, and assume that all costs incurred after split-off are variable. Read the requirements. Requirements 1. and 2. Could the company increase operating income by altering its processing decisions? If so, what would be the expected overall operating income? Which products should be processed further and which should be sold at split-off? Begin by preparing an incremental analysis to show the incremental gain or loss of processing each chemical further. (Use a minus sign or parentheses for an incremental loss.) B Processing further: Incremental sales Less: Incremental costs Incremental gain or (loss) Data Table - Chemical Additional Choose fri ck Check Answer. Product Sales Processing Costs 2 Pemain parts A $ $ 180,000 eck Answer 225,000 370,000 B 335,000 210,000 80,000
