Manhattan Enterprises manufactures cookware sets and sells the sets to department stores. Manhattan expects to sell 2,400 cookwa
1 answer:
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Answer:
break even rate = $31000
ultra break even point = $62000
Explanation:
given data
total fixed costs = $1,612,000
solution
WE FIND HERE FIRST contribution margin that is
contribution margin for regular per unit = $20 - $8
contribution margin = $12
and
contribution margin for ultra = $24 - $ 4
contribution margin for ultra = $20
so if 1 unit of regular is sold
2 unit of ultra will sold here
so
contribution margin is here
contribution margin = ( $12 × 1 )+ ( $12 × 2 )
contribution margin = $52
and
break even point at commposite rate = total fix cost ÷ contribution margin rate at commposite rate
so
break even rate =
break even rate = $31000
and
ultra break even point = 31000 × 2
ultra break even point = $62000
Answer:
Vaughn should produce Plain as it makes greater profit.
Explanation:
Vaughn Manufacturing can sell all the units it can produce of either Plain or Fancy but not both.
Plain has a unit contribution margin of $86 and takes two machine hours to make and Fancy has a unit contribution margin of $111 and takes three machine hours to make.
There are 2400 machine hours available to manufacture a product.
Profit per machine hour for Plain
=
= $43
Profit per machine hour for Fancy
=
= $37
The difference in profit
= $43 - $37
= $6
Plain makes $6 more profit per machine hour than Fancy.