Practice problem 3. Product Mix Decision o U-Develop makes metal and wood picture frames o The metal frames take 30 minutes of machine time/unit o The wood frames take 60 minutes of machine time/unit U-Develop Frame Department Price/unit Variable costs/unit: Direct materials Direct labor Variable MOH Contribution Margin Fixed costs: Fixed MOH Selling & admin. Total fixed costs . . Reason: ▪ Metal Frames $8 8 Reason: A 4 o Strategy if machine-hours (MH) are unlimited: ▪ How many metal frames? How many wood frames? $50 20 $30 Wood Frames I o Strategy if machine-hours (MH) are limited: ▪ How many metal frames? How many wood frames? $22 24 4 $80 50 $30 $3,000 1,500 $4,500

Marketing
20th Edition
ISBN:9780357033791
Author:Pride, William M
Publisher:Pride, William M
Chapter19: Pricing Concepts
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Practice problem 3. Product Mix Decision
o U-Develop makes metal and wood picture frames
o The metal frames take 30 minutes of machine time/unit
o The wood frames take 60 minutes of machine time/unit
U-Develop
Frame Department
Price/unit
Variable costs/unit:
Direct materials
Direct labor
Variable MOH
Contribution Margin
Fixed costs:
Fixed MOH
Selling & admin.
Total fixed costs
Metal
Frames
$8
A 00 00
8
$50
20
$30
Wood
Frames
I
$22
24
4
o Strategy if machine-hours (MH) are unlimited:
▪ How many metal frames?
▪
How many wood frames?
Reason:
o Strategy if machine-hours (MH) are limited:
How many metal frames?
▪ How many wood frames?
. Reason:
$80
50
$30
$3,000
1,500
$4,500
Transcribed Image Text:Practice problem 3. Product Mix Decision o U-Develop makes metal and wood picture frames o The metal frames take 30 minutes of machine time/unit o The wood frames take 60 minutes of machine time/unit U-Develop Frame Department Price/unit Variable costs/unit: Direct materials Direct labor Variable MOH Contribution Margin Fixed costs: Fixed MOH Selling & admin. Total fixed costs Metal Frames $8 A 00 00 8 $50 20 $30 Wood Frames I $22 24 4 o Strategy if machine-hours (MH) are unlimited: ▪ How many metal frames? ▪ How many wood frames? Reason: o Strategy if machine-hours (MH) are limited: How many metal frames? ▪ How many wood frames? . Reason: $80 50 $30 $3,000 1,500 $4,500
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ISBN:
9780357033791
Author:
Pride, William M
Publisher:
South Western Educational Publishing