Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour. Assuming that Widgeon Co. can sell all of the products it can make, what is the maximum contribution margin it can earn per month

$3,400

Explanation:

Particulars                                    Bales      Tales     Wales

Selling price                                   55            78         32

- Variable costs                             20           50        15

Contribution margin                       35           28         17

Required hours to process           5 hrs     7 hrs      1 hrs

Contribution margin per hours        7            4         17

Therefore, Widgeon Co. will earn maximum contribution only if it uses all its machine hours for production of wales

Maximum contribution margin = Contribution margin per hour * Number of machine hours

Maximum contribution margin = 17 * 2,000 hours

Maximum contribution margin = $3,400

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

answer; capital structure decision;