23 Mayer company sells two products with information as foll

23. Mayer company sells two products with information as follows: Sales price per unit Variable cost per unit $10 $30 S7$10 The products are machine made. Four units of product A can be made with one machine hour, and two units of product B can be made with one machine hour. The company has a maximum of 3,000 machine hours available per month. Assume there are no constraints on sales of either product, and the company can choose any product mix they wish. What is the maximum amount of contribution margin that the company could earn in a month? 24. The term goal congruence refers to the A) matching of financial goals of the company with its nonfinancial goals B) aligning the goals of business segment managers with the goals of top management C) achievement of the goals set by the management by utilizing the resources available D) duplication of costs as a result of decentralization

Solution

23.

Contribution margin per unit for product A = $3

Contribution margin per machine hour for product A= 4 × $3 = $12

Contribution margin per unit for product B = $20

Contribution margin per machine hour for product B = 2 × $20 = $40

As the contribution margin per machine hour is more for product B, the company could earn maximum $120000 as contribution margin from sale of product B only per month.

24.

B. Alinging the goal of business segment managers with the goal of top management.