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Use the following contribution margin statement: Product A Product B Total sales volume (units) 100 180 280 Revenue $18,000 $108,000 $126,000 Variable costs: direct materials

Use the following contribution margin statement:

Product A Product B Total
sales volume (units) 100 180 280
Revenue $18,000 $108,000 $126,000
Variable costs:
direct materials $3,600 $7,200 $10,800
direct labor $7,200 $18,000 $25,200
Contribution margin $7,200 $82,800 $90,000
Fixed costs $75,600
Profit $14,400

Required: (a) allocate the shared fixed costs ($75,600) among product A and product B, using direct labor dollars as the allocation basis. allocation rate= per DL$ FC allocated to A= FC allocated to B= (b) using the allocated costs from (a), compute the profit margin for product A and product B. If you get a negative number, enter it with a minus sign, i.e., enter negative $1000 as -1000, not as ($1000) profit margin for A= profit margin for B=

c) based on the profit margins from (b), should you kill product A or product B in the long term? Explain your decision.

d) allocate the shared fixed costs ($75,600) among product A and product B, using the number of units as the allocation basis. allocation rate= per unit FC allocated to A= FC allocated to B=

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