Unformatted text preview: in Part 3 satisfies the demand for Nealy and Pelta and leaves only 2,260 units (4,500 ─ 2,240) of Tersa unfilled. These remaining units of Tersa require 5,650 machine hours (2,260 units 2.5 MH per unit). The maximum price Marion Taylor is willing to pay for extra machine hours is $398, which is the unit contribution per machine hour for additional units of Tersa. That is, total cost per machine‐hour for these units will be $398 + $200 (variable cost per machine‐
hour) = $598 per machine‐hour. 3 11‐26 (60 min.) Multiple choice, comprehensive problem on relevant costs. You may wish to assign only some of the parts. Per Unit Manufacturing costs: Total Fixed Direct materials $1.00 Direct manufacturing labour 1.20 Variable manufac. indirect costs 0.80 Fixed manufac. indirect costs 0.50 $3.50 $0.50 Marketing costs: Variable $1.50 Fixed 0.90 2.40 0.90 $5.90 $1.40 1. (b) $3.50 Manufacturing Costs Variable $3.00 Fixed 0.50 Total $3.50 2. (e) None of the above. Decrease in operating income is $16,800. Old...
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- Winter '12
- The Land, OmniSport, Marion Taylor