4-43 Chapter 4 Cost-Volume-Profit Analysis CHALLENGE EXERCISES 189. Sharply Knives produces two models of titanium knives, Ginsu and Deluxe. Information regarding the products is summarized for the month of May in the following table: Deluxe Ginsu Total Number of knives 2,500 1,500 Sales revenue $ 88,000 $66,000 4,000 $154,000 Variable costs 30,800 29,700 Fixed costs 22,900 11,400 60,500 34,300 Operating income $34,300 $24,900 $ 59,200 Contribution margin per unit $22.88 $24.20 $23.38 Contribution margin ratio 65.00% 55.00% 60.71% Profit per knife $13.72 $16.60 Ounces of titanium per knife 7.5 9 Due to a strike, only 24,750 ounces of titanium will be available during each of the next few months. Each ounce of titanium costs $0.70. a. b. Given the limited resource, of which product should Sharply produce more? Support with calculations and provide sufficient conceptual justification why this product should be chosen. Assume Sharply needs to produce at least 750 of each model per month to stay competitive and it can sell all it produces. Assume that you chose Deluxe knives as your answer to part a. Show the calculation of how many deluxe knives that Sharply should produce to maximize profits. a. Deluxe Choose the product with the higher contribution margin per limited resource, in this case per ounce of titanium