contestada

Assume a company makes only three products, B, C, and D:
Product B Product C Product D
Estimated customer demand in units 700 600 800
Selling price per unit $ 80 $ 65 $ 45
Variable cost per unit $ 35 $ 26 $ 20
Machine-hours per unit 2.5 3.0 1.25
The company has only 2,700 machine-hours available. Up to how much should the company be willing to pay per hour to lease additional machine capacity?
a) $18
b) $20
c) $15
d) $13

Respuesta :

jepessoa

Answer:

d) $13

Explanation:

contribution margin per unit:

  • product B = $45
  • product C = $39
  • product D = $25

contribution margin per machine hour:

  • product B = $45 / 2.5 = $18
  • product C = $39 / 3 = $13
  • product D = $25 / 1.25 = $20

the company should first produce 800 units of product D and use 1,000 machine hours. Then it should produce 680 units of product B using 1,700 machine hours. In order to produce the remaining 20 units of product B and the 600 units of product C, the company must rent machine hours and the maximum possible price per hour is $13 (contribution margin per machine hour product C).

anthougo

The company should be willing to pay d) $13 per hour to lease additional machine capacity.

Data and Calculations:

                                                    Product B   Product C   Product D   Total

Estimated customer demand in units 700          600          800

Selling price per unit                          $ 80          $ 65         $ 45

Variable cost per unit                         $ 35          $ 26         $ 20

Contribution margin per unit              $45           $39          $25

Machine-hours per unit                        2.5           3.0           1.25

Contribution margin per MH               $18           $13          $20

Total machine hours required         1,750          1,800      1,000    4,550 hours

Available machine-hours capacity =                                              2,700 hours

Machine hours to lease =                                                                1,850 hours

Order of Production with own resources:

Product D's 800 units at 1.25 hours per unit = 1,000 hours

Product B's 680 units at 2.5 hours per unit = 1,700 hours

Total machine hours with own resources = 2,700 hours

Lease Machine Capacity:

Product B's 20 units at 2.5 hours per unit = 50 hours

Product C's 600 units at 3 hours per unit = 1,800 hours

Total machine hours required under leasing = 1,850 hours

Thus, the company will be willing to lease machine capacity at $13 per machine hour to produce 20 units of Product B and 600 units of Product C.

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