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Buzz Appliances manufactures two? products: Food Processors and Espresso Machines. The following data are? available: Food Processors Espresso...

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Accounting

Buzz Appliances manufactures two? products: Food Processors andEspresso Machines. The following data are? available:

Food Processors

Espresso Makers

Sales price

$ 165.00$165.00

$ 275.00$275.00

Variable costs

$ 60.00$60.00

$ 180.00$180.00

The company can manufacture two food processors per machine hourand three espresso machines per machine hour. The? company'sproduction capacity is

1 comma 6001,600

machine hours per month.

The company has demand of

1 comma 2001,200

espresso machines. How many espresso machines and foodprocessors should they produce based on demand and availablemachine? hours?

Answer & Explanation Solved by verified expert
3.8 Ratings (604 Votes)

Food processors Espresso makers
Sales price $                       165 $        275
Variable costs $                         60 $        180
Contribution margin $                       105 $          95
Units per machine hour 2 3
Contribution margin per machine hour $210 $285
Production 2400 1200
Workings:
(i) Production capacity per month 1600 hours
(ii) Production of Espresso machines 1200 units
(iii) Units per machine hour 3 units per hour
(iv) = [(ii) / (iii)] Production hours of Espresso machines 400 hours
(v) = [(i) - (iv)] Remaining capacity available 1200 hours
(vi) Units per machine hour 2 units per hour
(v) X (vi) Production of Food processors 2400 units
Note: Espresso makers have the higher contribution margin, therefore first it is beneficial to produce Espresso makers up their demand

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