If you get a negative number enter it with a minus sign ie

Reference no: EM13586366

Use the following contribution margin statement:

	Product A	Product B	Total
sales volume (units)	100	180	280
Revenue	$18,000	$108,000	$126,000
Variable costs:
direct materials	$3,600	$7,200	$10,800
direct labor	$7,200	$18,000	$25,200
Contribution margin	$7,200	$82,800	$90,000
Fixed costs			$75,600
Profit			$14,400

Required:
(a) allocate the shared fixed costs ($75,600) among product A and product B, using direct labor dollars as the allocation basis.
allocation rate= per DL$
FC allocated to A=
FC allocated to B=

(b) using the allocated costs from (a), compute the profit margin for product A and product B.
If you get a negative number, enter it with a minus sign, i.e., enter negative $1000 as -1000, not as ($1000)
profit margin for A=
profit margin for B=

c) based on the profit margins from (b), should you kill product A or product B in the long term? Explain your decision.

d) allocate the shared fixed costs ($75,600) among product A and product B, using the number of units as the allocation basis.

allocation rate= per unit
FC allocated to A=
FC allocated to B=

Reference no: EM13586366

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