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Ortiz Company is able to produce two products, G and B, with the same machine in its factory. The following information is available.
Product G Product BSelling price per unit $ 140 $ 240Variable costs per unit 20 70
Contribution margin per unit $ 120 $ 170
Machine hours to produce 1 unit 0.4 hours 4.0 hoursMaximum unit sales per month 840 units 250 units
The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $6,100 additional fixed costs per month.
Required: 1.Determine the contribution margin per machine hour that each product generates.
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