The Dash Company Manufactures Two Products: a and B

question 36

Essay

The Dash Company manufactures two products: A and B. Information about the products is as follows:
There are 5,000 machine hours available during the quarter.
Required:

a.
Which of the products should Dash Company produce if it can only produce one of the products?
b.
Assume that Dash Company uses half of the hours available to produce Product A and half of the hours available to produce Product B. What is Dash's total contribution margin?
c.
Assume that Dash Company produces the product mix that will maximize profit. What is Dash's total contribution margin?

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return, reflecting the time value of money.

Earnings Rate

The rate at which an investment or savings account generates income over a specific period of time.

Net Present Value

A financial metric that estimates the profitability of investments by calculating the difference between the present value of cash inflows and outflows over a period of time.

Capital Investment Proposals

Capital investment proposals are plans or suggestions submitted for consideration to undertake significant spending on projects expected to generate future returns.