Murphy Company manufactures and sells three products. Relevant per unit data concerning each product are given below. Instructions (a) Compute
(a) Compute the contribution margin per unit of the limited resource (machine hour) for each product.
(b) Assuming 3,000 additional machine hours are available, which product should be manufactured?
(c) Prepare an analysis showing the total contribution margin if the additional hours are
(1) Divided equally among the products, and
(2) Allocated entirely to the product identified in (b)above.
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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