Question

Insiteful Instruments produces two models of binoculars. Information for each model is as follows:


Total manufacturing overhead amounts to $180,000 per month, one-third of which is fixed. The demand for either product is sufficient to keep the plant operating at full capacity (10,000 machine hours per month). Assume that only one product is to be produced in the future.

Instructions
a. Prepare a schedule showing the contribution margin per machine-hour for each product.
b. Explain your recommendation as to which of the two products should bediscontinued.


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  • CreatedApril 17, 2014
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