Tanek Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Tanek is currently operating at full capacity with limited machine time. Sales and production information relevant to each model follows. EconomyStandardDeluxe Selling price$30$50$100 Variable costs and expenses$14$15$46 Machine hours required0.50.81.6 Calculate contribution margin per unit. Economy $: Standard $: Deluxe $: Ignoring the machine time constraint, which single product should Tanek Industries produce? What is the contribution margin per unit of limited resource for each product? (Round answers to 2 decimal places, e. g. 10.50.) Contribution margin per limited resources economy$: standard$: deluxe$: If additional machine time could be obtained, the additional time should be used to produce the product.

Question

Nikolas Dorsey

Business

31 January, 06:37

Tanek Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Tanek is currently operating at full capacity with limited machine time. Sales and production information relevant to each model follows. EconomyStandardDeluxe Selling price$30$50$100 Variable costs and expenses$14$15$46 Machine hours required0.50.81.6 Calculate contribution margin per unit. Economy $: Standard $: Deluxe $: Ignoring the machine time constraint, which single product should Tanek Industries produce? What is the contribution margin per unit of limited resource for each product? (Round answers to 2 decimal places, e. g. 10.50.) Contribution margin per limited resources economy$: standard$: deluxe$: If additional machine time could be obtained, the additional time should be used to produce the product.

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Answers (1)

Know the Answer?

Titus Lindsey · Answer 1

(1) 12; 35; 54

(2) 24; 43.75; 33.75

Explanation:

Contribution margin per unit.

Economy $:

= Selling price - Variable costs and expenses

= 30 - 14

= 12

Standard $:

= Selling price - Variable costs and expenses

= 50 - 15

= 35

Deluxe $:

= Selling price - Variable costs and expenses

= 100 - 46

= 54

Ignoring the machine time constraint, Tanek Industries should produce Delux

Contribution margin per limited resources:

Economy$:

= contribution margin per unit : Machine hours required

= 12 : 0.5

= 24

Standard$:

= contribution margin per unit : Machine hours required

= 35 : 0.8

= 43.75

Deluxe$:

= contribution margin per unit : Machine hours required

= 54 : 1.6

= 33.75

The company should produce standard since it has highest contribution margin per unit of limited resource.