Easton Corporation makes two different boat anchorsa traditional fishing anchor and a high end yacht anchorusing the same production machinery The contribution margin of the yacht anchor is three times as high as that of the other product The company is currently operating at full capacity and has ...

MEMO To Bjorn BorgCEO From Student Re Best use of limited resources I share your concern that since ...

Easton Corporation makes two different boat anchorsa traditional fishing anchor and a high-end yacht anchorusing the same

Question:

Easton makes two different boat anchors—a traditional fishing anchor and a high-end yacht anchor—using the same production machinery. The of the yacht anchor is three times as high as that of the other product. The company is currently operating at full capacity and has been doing so for nearly two years. Bjorn Borg, the company’s CEO, wants to cut back on production of the fishing anchor so that the company can make more yacht anchors. He says that this is a “no-brainer” because the of the yacht anchor is so much higher.

Instructions
Write a short memo to Bjorn Borg describing the analysis that the company should do before it makes this decision and any other considerations that would affect the decision.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...