Easy Cook Company manufactures two products: toaster ovens and bread machines. The following data are available: Easy Cook can manufacture five toaster ovens per machine hour and three bread machines per machine hour. Easy Cook's production capacity is 1,500 machine hours per month. What is the contribution margin per machine hour for bread machines?

Question

Easy Cook Company manufactures two products: toaster ovens and bread machines. The following data are available:  Easy Cook can manufacture five toaster ovens per machine hour and three bread machines per machine hour. Easy Cook's production capacity is 1,500 machine hours per month. What is the contribution margin per machine hour for bread machines?

Quizplus · Accepted Answer

- To calculate the contribution margin per machine hour for bread machines, we need to know the contribution margin per unit and the number of bread machines produced per machine hour. 
- We are not given the contribution margin per unit, so we cannot directly calculate the contribution margin per machine hour for bread machines. 
- However, we can use the production capacity and the production ratios to find the maximum number of bread machines that can be manufactured in a month: 
	- Total machine hours = 1,500 
	- Toaster ovens per machine hour = 5 
	- Bread machines per machine hour = 3 
	- Maximum number of toaster ovens = 1,500 machine hours x 5 toaster ovens per machine hour = 7,500 toaster ovens 
	- Maximum number of bread machines = 1,500 machine hours x 3 bread machines per machine hour = 4,500 bread machines 
- If Easy Cook is currently producing fewer than 4,500 bread machines per month, it has the capacity to produce more and increase its profits. 
- Without knowing the contribution margin per unit for each product, we cannot determine which product has a higher contribution margin per machine hour.

Easy Cook Company Manufactures Two Products: Toaster Ovens and Bread