In: Accounting
Tanek Industries manufactures and sells three different models
of wet-dry shop vacuum cleaners. Although the shop vacs vary in
terms of quality and features, all are good sellers. Tanek is
currently operating at full capacity with limited machine
time.
Sales and production information relevant to each model
follows.
Product |
||||||
Economy |
Standard |
Deluxe |
||||
Selling price | $33 | $55 | $110 | |||
Variable costs and expenses | $18 | $22 | $52 | |||
Machine hours required | 0.5 | 0.8 | 1.6 |
Calculate contribution margin per unit.
Product |
||||||
Economy |
Standard |
Deluxe |
||||
Contribution margin per unit | $ |
$ |
$ |
Ignoring the machine time constraint, which single product should Tanek Industries produce?
What is the contribution margin per unit of limited resource for each product? (Round answers to 2 decimal places, e.g. 10.50.)
Economy |
Standard |
Deluxe |
||||
Contribution margin per limited resource |
$ |
$ |
$ |
If additional machine time could be obtained, how should the
additional time be used?
The additional time should be used to produce the _______
product.