Bell Company Manufactures Two Tables, Small and Large Bell Company Can Sell a Maximum of 1,000 Units of Data

question 20

Essay

Bell Company manufactures two tables, Small and Large. The following data is available: $\begin{array}{lll}&\text { Small }&\text { Large }\\\text { Selling price } p \text { er unit } & \$ 100 & \$ 210 \\\text { Variable cost per unit } & \$ 68 & \$ 138 \\\text { M achine hours required } & 3.2 & 10 \\\text { Total fixed costs } & & \$ 9,600\end{array}$ Bell Company can sell a maximum of 1,000 units of each size of table. Machine hour capacity is 8,000 hours per year.
Required:
a. Which table has the higher contribution margin per unit?
b. Which table has the higher contribution margin per hour?
c. How many tables of each size should be produced to maximize income, and what is the maximum income?

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, determined by physical counts or accounting methods.

LIFO

Stands for Last In, First Out, an inventory valuation method where the most recently produced or purchased items are recorded as sold first.

Periodic Inventory System

An inventory accounting system where inventory counts are performed and updated at specific intervals to determine cost of goods sold and ending inventory levels.

Ending Inventory

The value of goods available for sale at the end of an accounting period. It is the beginning inventory plus purchases minus the cost of goods sold.