# Edgerron Company is able to produce two products, G and B, with the same machine in...

###### Question:

Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. Product GProduct BSelling price per unit $90$120 Variable costs per unit 30 72 Contribution margin per unit $60$48 Machine hours to produce 1 unit0.4hours 1.0hours Maximum unit sales per month600units 200units

The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $6,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.) 1. Determine the contribution margin per hour that each product generates for Product G and Product B. CM per unit Machine hours per unit CM per machine hour Max # of units to be sold Hours required to produce max units 2. How many Units of product G and B should the company produce if it continues to operate w only one shift? How much total con margin does this mix produce each month? Hours dedicated to the production of each product Units produced for most profitable sales mix Con margin per unit Total con margin - one shift 3. If the company adds another shift, how many units of Product G and B should it produce? How much total contribution margin would this mix produce each month? Hours dedicated to the production of each product units produced for most profitable sales mix total contribution margin - two shifts 4. Suppose that the company determines that it can increase product g's max sales to 700 units per month by spending$5,000 per month in marketing efforts. Should the company pursue this strategy and the double shift?

Hours dedicated to the production of each product

units produced for most profitable sales mix

con margin per unit

total con margin - two shifts and marketing campaign

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