Question

Crane Company can produce and sell only one of the following two products: Oven Contribution Hours Required Margin Per Unit Muffins 0.2 $4 Coffee 0.3 $5 Cakes The company has oven capacity of 3000 hours. How much will contribution margin be if it produces only the most profitable product? $40000. $75000. $50000. $60000.

          Crane Company can produce and sell only one of the following two products:
Oven
Contribution
Hours
Required
Margin Per
Unit
Muffins
0.2
$4
Coffee
0.3
$5
Cakes
The company has oven capacity of 3000 hours. How much will contribution margin be if it produces only the most profitable product?
$40000.
$75000.
$50000.
$60000.

Crane Company can produce and sell only one of the following two products:
Oven
Contribution
Hours
Required
Margin Per
Unit
Muffins
0.2
4
Coffee
0.35
Cakes
The company has oven capacity of 3000 hours. How much will contribution margin be if it produces only the most profitable product?
40000.75000.
50000.60000.

Added by Lisa M.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Georgiann Andersen

Step 1

To do this, we can calculate the contribution margin per oven hour for each product. For muffins, the contribution margin per oven hour is $4 / 0.2 = $20. For coffee cakes, the contribution margin per oven hour is $5 / 0.3 = $16.67. Since the contribution margin Show more…

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Crane Company can produce and sell only one of the following two products: Oven Contribution Hours Required Margin Per Unit Muffins 0.2 $4 Coffee Cakes 0.3 $5 The company has oven capacity of 3000 hours. How much will the contribution margin be if it produces only the most profitable product? $75000.