Short-run pricing, capacity constraints. Boutique Chemicals makes a specialized chemical product, Bolzene, from a specially imported material, Pyrone. To make 1 kilogram ofBolzene requires 1.5 kilograms of Pyrone. Bolzene has a contribution margin of $7.20 per kilogram.

Boutique has just received a request to manufacture 3,000 kilograms of Seltium that also requires Pyrone as the material input. Boutique calculates the following costs of making 1 kilogram of $eltium:

Pyrone (2 kilograms X $4.80 per kilogram) $ 9.60 Direct manufacturing labour 4.80 Variable manufacturing overhead costs 3.60 Fixed manufacturing overhead costs allocated 6.00 Total manufacturing costs $24.00 Boutique has adequate excess plant capacity to make $eltium.

Required 1. $uppose Boutique has adequate Pyrone available to make $eltium. What is the minimum price per kilogram that Boutique should charge to manufacture $eltium?

2. Now suppose Pyrone is in short supply. The Pyrone used to make $eltium will reduce the Bolzene that Boutique can make and sell. What is the minimum price per kilogram that Boutique should charge to manufacture $eltium?