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mregueral mregueral
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3 months ago
Logan's, Inc. has the following production and cost data for two of its products, Basic and Supreme:

​​BasicSupreme
Contribution margin per unit$160$140
Machine hours needed per unit45

A total of 40,000 hours is available each period for the production of the two products. The demand for both products is strong and Logan is not sure it can fill all orders expected to be received.

Required:

a. Ignoring qualitative issues, for which of the two products should Logan focus on filling
orders first?
b. List three alternatives that Logan should consider in order to produce more units within
the 40,000 hours.
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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dmp7474dmp7474
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3 months ago
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More solutions for this book are available here
a.Basic = $160 ÷ 4 = $40 contribution margin per machine hour
Supreme = $140 ÷ 5 = $28 contribution margin per machine hour
Logan should produce Basic first as it provides a higher contribution margin of $40 for each machine hour used in production, compared to only $28 per machine hour for Supreme.

b.Logan might consider the following:
•Purchase machinery that will produce more units in less time.
•Hire more skilled workers that can complete the orders quickly and without
​defects.
•Look at other products currently produced to determine if another lesser
​profitable product should be discontinued.
•Redesign the product to move production more efficiently.
1

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mregueral Author
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3 months ago
Just got PERFECT on my quiz
Jose^2
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Yesterday
I appreciate what you did here, answered it right Smiling Face with Open Mouth
Tim0301
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2 hours ago
This helped my grade so much Perfect
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