Answer and Explanation:
a. The computation of contribution margin and income from operations is shown below:-
Particulars Large Medium Small Total
Units produced 3,000 3,000 3,000 9,000
Revenues a $5,52,000 $4,80,000 $3,00,000 $13,32,000
(3,000 × $184) (3,000 × $160) (3,000 × $100)
Less:
Variable costs b $3,90,000 $3,60,000 $2,28,000 $9,78,000
(3,000 × $130) (3,000 × $120) (3,000 × $76)
Contribution margin $162,000 $1,20,000 $72,000 $3,54,000
c = (a - b)
Less: Fixed costs d $85,000
Income from operations 2,69,000
(d = c - d)
b. The preparation of most profitable per bottleneck hour is shown below:-
Particulars Large Medium Small
Contribution margin a $54 $40 $24
Autoclave hours
per unit b 3.00 2.00 1.00
Unit contribution margin per production
bottleneck hour 18 20 24
(a ÷ b)
