Pasadena Corporation produces three products, and currently has a shortage of machine hours since one of its two machines is down; only 450 hours are available this month. The selling prices, costs, and labor requirements of the three products are as follows: Product A Product B Product C Sales price $ 10.25 $ 9.00 $ 2.50 Variable cost per unit $ 5.00 $ 4.00 $ 2.00 Machine hours per unit 1.75 1.00 0.25 Required: What is the contribution margin per unit for each product? What is the contribution margin per machine hour for each product? Assume Pasadena has unlimited demand for each product. Which product should Pasadena focus on producing?
Pasadena Corporation produces three products, and currently has a shortage of machine hours since one of its two machines is down; only 450 hours are available this month. The selling prices, costs, and labor requirements of the three products are as follows: Product A Product B Product C Sales price $ 10.25 $ 9.00 $ 2.50 Variable cost per unit $ 5.00 $ 4.00 $ 2.00 Machine hours per unit 1.75 1.00 0.25 Required: What is the contribution margin per unit for each product? What is the contribution margin per machine hour for each product? Assume Pasadena has unlimited demand for each product. Which product should Pasadena focus on producing?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 12EB: Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes...
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