Gordon company produces two types of gears gear q and gear

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Gordon Company produces two types of gears, Gear Q and Gear S, with unit contribution margins of $2 and $5, respectively. Each gear must spend time on a special machine. The firm owns ten machines that together provide 25,000 hours of machine time per year. Gear Q requires 0.10 hours of machine time; Gear S requires 0.4 hours of machine time
A.

  • What is the contribution margin per hour of machine time for Gear Q?
  • What is the contribution margin per hour of machine time for Gear S?

B.

  • Suppose that Gordon cannot sell more than 200,000 units of each type of gear.
  • How many units of Gear Q should be produced?
  • How many units of Gear S should be produced?
  • What is the total contribution margin from this product mix?

Reference no: EM13596290

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