2) Delta Manufacturing produces two types of widgets: Alpha and Beta. Both widgets are produced in...

  

Transcribed Image Text:

2) Delta Manufacturing produces two types of widgets: Alpha and Beta. Both widgets are produced in the same machine, but they require different amounts of machine hours. The company is faced with a capacity constraint due to a limited number of machine hours available each month. Information: Machine hours available each month: 1,000 hours Machine hours required per unit: Selling Prices: Alpha: $50 per unit Variable Costs: Alpha: $30 per unit Monthly Fixed Costs: $20,000 A) Calculate the contribution margin per machine hour for both Alpha and Beta. Alpha: 2 hours Beta: $120 per unit Beta: $70 per unit Beta: 4 hours B) If Delta Manufacturing wishes to maximize monthly profit given the capacity constraint, how many units of Alpha and Beta should they produce? C) What would be the total contribution margin and monthly profit based on your recommended production mix? D) If machine hours could be increased to 1,200 hours per month at an additional fixed cost of $5,000, should the company do it? What would be the new production mix and profit? 2) Delta Manufacturing produces two types of widgets: Alpha and Beta. Both widgets are produced in the same machine, but they require different amounts of machine hours. The company is faced with a capacity constraint due to a limited number of machine hours available each month. Information: Machine hours available each month: 1,000 hours Machine hours required per unit: Selling Prices: Alpha: $50 per unit Variable Costs: Alpha: $30 per unit Monthly Fixed Costs: $20,000 A) Calculate the contribution margin per machine hour for both Alpha and Beta. Alpha: 2 hours Beta: $120 per unit Beta: $70 per unit Beta: 4 hours B) If Delta Manufacturing wishes to maximize monthly profit given the capacity constraint, how many units of Alpha and Beta should they produce? C) What would be the total contribution margin and monthly profit based on your recommended production mix? D) If machine hours could be increased to 1,200 hours per month at an additional fixed cost of $5,000, should the company do it? What would be the new production mix and profit?

Answer rating: 100% (QA)

A Contribution margin per machine hour for both Alpha and Beta For Alpha Contribution Margin per Unit Selling Price Variable Cost 50 30 20 Machine Hou... View the full answer