Becky's Bakery produces two products, cake and pie. Becky's Bakery sells each cake for $15.00 and each pie for $10.00. Variable costs for cakes and pies are respectively, $7.00 and $6.00. There are 3,200 direct labor hours per month available for producing one of the two products. Fixed manufacturing overhead cost is allocated at $1,000 per month. Each cake and pie require 2 direct labor hours.
Compute the following:
A. Contribution margin per unit for each product.
B. Contribution margin per direct labor hour for each product.
C. The total number of products produced if only that product is produced each month.
D. Income for a month if only one product is produced and total production is sold.

Question

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The Answer of Becky's Bakery produces two products, cake and pie. Becky's Bakery sells each cake for $15.00 and each pie for $10.00. Variable costs for cakes and pies are respectively, $7.00 and $6.00. There are 3,200 direct labor hours per month available for producing one of the two products. Fixed manufacturing overhead cost is allocated at $1,000 per month. Each cake and pie require 2 direct labor hours.
Compute the following:
A. Contribution margin per unit for each product.
B. Contribution margin per direct labor hour for each product.
C. The total number of products produced if only that product is produced each month.
D. Income for a month if only one product is produced and total production is sold.

Becky's Bakery Produces Two Products, Cake and Pie