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Sales Mix Decision P 4 Management at Generic Chemical Company is evaluating its product mix in an attempt to maximize profits For the past two years Generic has produced four products

Sales Mix Decision

P 4. Management at Generic Chemical Company is evaluating its product mix in an attempt to maximize profits. For the past two years, Generic has produced four products, and all have large markets in which to expand market share. Heinz Bexer, Generic’s controller, has gathered data from current operations and wants you to analyze them for him. Sales and operating data are as follows:

 

Product AZ1

Product BY7

Product CX5

Product DW9

Variable production costs

$71,000

$91,000

$91,920

$97,440

Variable selling costs

$10,200

$5,400

$12,480

$30,160

Fixed production costs

$20,400

$21,600

$29,120

$18,480

Fixed administrative costs

$3,400

$5,400

$6,240

$10,080

Total sales

$122,000

$136,000

$156,400

$161,200

Units produced and sold

85,000

45,000

26,000

14,000

Machine hours used*

17,000

18,000

20,800

16,800

Required

1. Compute the machine hours needed to produce one unit of each product.

2. Determine the contribution margin per machine hour for each product.

3. Which product line(s) should be targeted for market share expansion?

Jun 22 2020 View more View Less

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