Springer Products Manufactures Three Different Product Lines, Model X, Model

question 48

Multiple Choice

Springer Products manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:

Which model has the greatest contribution margin per machine-hour?

• A) Model X
• B) Model Y
• C) Model Z
• D) Both Model X and Model Y have the highest and same contribution margin per machine-hour

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating labor costs to products.

Raw Materials

Basic materials that are used in the manufacturing process to produce goods and products.

Predetermined Overhead Rate

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is computed by dividing the estimated total manufacturing overhead cost for the period by the estimated total amount of the allocation base for the period.

Variable Overhead Rate

The ratio of variable overhead costs to an activity base, used to allocate variable overhead costs to products or services.