Johnstone Company Makes Two Products: Carpet Kleen and Floor Deodorizer

question 79

Multiple Choice

Johnstone Company makes two products: Carpet Kleen and Floor Deodorizer. Operating information from the previous year follows. $$\begin{array} { l c c } & \text { Carpet Kleen } & \text { Floor Deodorizer } \\\text { Units produced and sold } & 5,000 & 4,000 \\\text { Machine hours used } & 5,000 & 2,000 \\\text { Sales price per unit } & \$ 7 & \$ 10 \\\text { Variable cost per unit } & \$ 4 & \$ 8\end{array}$$ Fixed costs of $20,000 per year are presently allocated equally between both products. If the product mix were to change, total fixed costs would remain the same.
The contribution margin per machine hour for Floor Deodorizer is:

• A) $0.25.
• B) $2.00.
• C) $4.00.
• D) $5.00.
• E) $20.00.

---

Definitions:

Complex Information

Information that is intricate due to numerous interconnected parts or concepts, requiring careful analysis to understand.

Planning

The process of making detailed strategies or decisions about what one is going to do in the future, often involving setting goals and determining actions to achieve them.

Formal Report

A structured document that presents information gathered from a research process or investigation, typically following a standardized format to communicate findings.

Significance

The importance or meaning of something, especially in terms of its impact or relevance.