Edge Company produces two models of its product with the same machine. The machine has a capacity of 176 hours per month. The following information is available.

Required

1. Determine the contribution margin per machine hour for each model.
2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month?
3. Assume the maximum demand for the Standard model is 100 units (not 600 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month?

Transcribed Image Text:

Standard Deluxe Selling price per unit....... $120 $160 Variable costs per unit .... 90 $ 70 40 $ 80 Contribution margin per unit ...... Machine hours per unit ..... Maximum unit sales per month .... 1 hour 2 hours 600 units 200 units