Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Tischler the Honey Man THM) purchases honeycombs from beekeepers for $3.20 per kilogram. THM produces two main products from the honeycombs-honey and beeswax. Honey is
Tischler the Honey Man THM) purchases honeycombs from beekeepers for $3.20 per kilogram. THM produces two main products from the honeycombs-honey and beeswax. Honey is drained from the honeycombs, and then the honeycombs are melted down to form cubes of beeswax. The beeswax is sold for $2.70 per kilogram. The honey can be sold in raw form for $4.20 per kilogram. However, some of the raw honey is used by THM to make honey drop candies. The candies are packed in a decorative container and are sold in gift and specialty shops. A container of honey drop candies sells for $9.20 Each container of honey drop candies contains three-quarters of a kilogram of honey. costs associated with making the candies are as follows: 1.60 Decorative container Other ingredients 0.85 Direct labour 1.40 Variable manufacturing overhead 0.70 4.55 Total variable manufacturing cost The monthly fixed manufacturing overhead costs associated with making the candies follow Master candy maker's salary 4,480 Depreciation of candy-making equipment 640 Total fixed manufacturing cost 5,120 The master candy maker has no duties other than to oversee production of the honey drop candies. The candy-making equipment is special-purpose equipment that was constructed specifically to make this particular candy. The equipment has no resale value and does not wear out through use A salesperson is paid $2,259 per month plus a commission of 5% of sales to market the honey drop candies The company had enjoyed robust sales of the candies for several years, but the recent entrance of a competing product into the marketplace has depressed sales of the candies. The management of the company is now wondering whether it would be more profitable to sell all of the honey rather than converting some of it into candies Required 1. What is the incremental contribution margin per container from further processing the honey into candies? (Round intermediate calculations and final answer to 2 decimal places.) ncremental 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