Question
Zap Video Inc. produces two basic types of video games, Clash and Slash. Pertinent data follow (DLH = direct labor hour): Clash Slash Sales price
Zap Video Inc. produces two basic types of video games, Clash and Slash. Pertinent data follow (DLH = direct labor hour): Clash Slash Sales price (per unit) $ 370 $ 295 Costs (per unit): Direct materials 107 71 Direct labor 76 100 Variable factory overhead (@ $15 per DLH) 100 50 Allocated fixed factory overhead (based on DLHs) 37 19 Marketing expenses (all variable) 34 37 Total costs 354 277 Operating income (per unit) $ 16 $ 18 There is insufficient labor capacity in the plant to meet the combined demand for both Clash and Slash. Both products are produced through the same production departments. The contribution margin per unit for Clash is:
$40.
$58.
$53.
$50.
$34.
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