Question
Abbey & Aliyah Inc. manufacture wool socks and gloves for outdoor sports. Both products must go through a special process which makes the wool water
Abbey & Aliyah Inc. manufacture wool socks and gloves for outdoor sports. Both products must go through a special process which makes the wool water proof. The processing department which does this has a capacity of only 1,280 hours per month. The following information is available about the products manufactured:
Product | Socks | Gloves |
Selling price per unit | $30 | $40 |
Variable costs per unit | 12 | 16 |
Time required to process one unit (in hours) | 2 hrs | 3 hrs |
a) What is the contribution margin per hour of processing for each product?
b) What is the optimal mix of products in units if there are no constraints on demand?
Socks:
Gloves:
c) What is the total contribution margin earned for the optimal mix of products?
Socks (units):
Gloves (units):
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