Product mix decision under constraint (Learning Objective 5)

Brun, located in St. Cloud, Minnesota, produces two lines of electric toothbrushes: deluxe and standard. Because Brun can sell all of the toothbrushes it produces, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data:

After expansion, the factory will have a production capacity of 4,500 machine hours per month. The plant can manufacture either 60 standard electric toothbrushes or 24 deluxe electric toothbrushes per machine hour.
Requirements 1. Identify the constraining factor for Brun.
2. Prepare an analysis to show which product line to emphasize.

Transcribed Image Text:

Sale price.......... Variable expenses. Contribution margin.. Per Unit Deluxe Toothbrush Standard Toothbrush $80 $48 20 18 $60 $30 75% 62.5% Contribution margin ratio....