Katy Company manufactures three product models, Standard, Premium, and Deluxe. The following is the data for each
Question:
Katy Company manufactures three product models, Standard, Premium, and Deluxe. The following is the data for each product per week.
Standard
Premium
Deluxe
Total
Maximum weekly demand (in units)
300
250
200
750
units
Current weekly production (in units)
200
200
200
600
units
Contribution margin per unit
$40
$45
$60
Number of machine hours required
2
3
5
Maximum Machine hours per week
2,000
hours
Required)
a)What is the contribution margin per machine hour for each model? (10 points)
b) What is the total contribution margin at the current level of production for each model? (5 points)
c) Given maximum capacity, how many units of chairs of each model to be produced to maximize profits? (5 points)
d) If there is no limit for machine hours available, how many chairs of each model should the company produce to maximize profits? (5 points)
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu