The Bilko Company manufactures two products: widgets and gadgets. Information about the products is as follows:
There are 40,000 direct labour hours available during the year.
Required:

a.
Which of the products should Bilko Company produce if it can only produce one of the products?
b.
Assume that Bilko Company uses half of the hours available to produce widgets and half of the hours available to produce gadgets. What is Bilko's total contribution margin?
c.
Assume that Bilko Company produces the product mix that will maximize profit. What is Bilko's total contribution margin?

Question

The Bilko Company manufactures two products: widgets and gadgets. Information about the products is as follows:
There are 40,000 direct labour hours available during the year.
Required:
  
a.
Which of the products should Bilko Company produce if it can only produce one of the products?
b.
Assume that Bilko Company uses half of the hours available to produce widgets and half of the hours available to produce gadgets. What is Bilko's total contribution margin?
c.
Assume that Bilko Company produces the product mix that will maximize profit. What is Bilko's total contribution margin?

Quizplus · Accepted Answer

The Answer of The Bilko Company manufactures two products: widgets and gadgets. Information about the products is as follows:
There are 40,000 direct labour hours available during the year.
Required:
  
a.
Which of the products should Bilko Company produce if it can only produce one of the products?
b.
Assume that Bilko Company uses half of the hours available to produce widgets and half of the hours available to produce gadgets. What is Bilko's total contribution margin?
c.
Assume that Bilko Company produces the product mix that will maximize profit. What is Bilko's total contribution margin?

The Bilko Company Manufactures Two Products: Widgets and Gadgets