Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available:

Sensational is experiencing a bottleneck in one of it's processes that affects each product as follows:
Bottleneck process hours per unit:
Iced Tea - 3
Soda - 3
Lemonade - 4
(a) Using a theory of constraints (TOC) approach, rank the products in terms of profitability?
(b) What price for lemonade would equate its profitability (contribution margin per bottleneck hour) to that of soda?

Transcribed Image Text:

Iced Tea Lemonade Soda Sales Price Per Unit $.50 $.90 $.60 Variable Cost Per Unit .30 .10 .15 Contribution Margin Per Unit $.60 $.45 $.40