Calculation of Contribution Margin Per Unit & Machine-Hour for Md Widgets Essay Sample

MD Widgets manufactures three different merchandise lines. Model X. Model Y. and Model Z. Considerable market demand exists for all theoretical accounts. The undermentioned per unit informations apply:

Model X Model YModel Z
Selling monetary value $ 80 $ 90 $ 100
Direct stuffs $ 30 30 30
Direct labour ( $ 10/hour ) $ 15 15 20
Variable support costs $ 5 10 10
( $ 5 per machine-hour )
Fixed support costs 20 20 20

a ) For each theoretical account. calculate the part border per unit. B ) For each theoretical account. calculate the part border per machine-hour. degree Celsius ) If there is extra capacity. which theoretical account is the most profitable to bring forth? Why? vitamin D ) If there is a machine dislocation. which theoretical account is the most profitable to bring forth? Why? vitamin E ) How can MD promote her gross revenues people to advance the more profitable theoretical account?

Solution:
MODEL XMODEL YMODEL Z
Selling monetary value $ 80 $ 90 $ 100 Direct stuffs $ 30 $ 30 $ 30 Direct labour ( $ 10 per hr ) $ 15 $ 15 $ 20 Variable support costs ( $ 5 per machine-hour ) $ 5 $ 10 $ 10 Total variable cost $ 50 $ 55 $ 60 Fixed support costs $ 20 $ 20 $ 20

Contribution border per unit = Selling monetary value per unit – Variable cost per unit $ 30 $ 35 $ 40 Contribution border per machine hr
$ 30 $ 18 $ 20

a ) The part border per unit for:
Model X = $ 30
Model Y = $ 35
Model Z = $ 40

B ) The part border per machine-hour for:
Model X = $ 30
Model Y = $ 35
Model Z = $ 40

degree Celsius ) If there is extra capacity. which theoretical account is the most profitable to bring forth? Why? Model Z is more profitable since its part border is greater than the other two theoretical accounts which will ensue in extra net income. vitamin D ) If there is a machine dislocation. which theoretical account is the most profitable to bring forth? Why? Model X is more profitable at times of machine break-down since the machine hr required per unit is 1. whereas for the other two theoretical accounts 2 machine hours are required e ) How can MD promote her gross revenues people to advance the more profitable theoretical account? By presenting a gross revenues committee depending on the most profitable theoretical account. MD can promote her gross revenues people to advance and sell the most profitable theoretical account

Mentions:

hypertext transfer protocol: //classof1. com/homework-help/accounting-homework-help