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Agee Products, located in Peoria, Arizona, produces two lines of electric toothbrushes: Deluxe and Standard. Because Agee can sell all the toothbrushes it produces,
Agee Products, located in Peoria, Arizona, produces two lines of electric toothbrushes: Deluxe and Standard. Because Agee can sell all 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: (Click the icon to view the data.) After expansion, the factory will have a production capacity of 4,700 machine hours per month. The plant can manufacture either 56 Standard electric toothbrushes or 28 Deluxe electric toothbrushes per machine hour. Requirements 1. Identify the constraining factor for Agee Products. 2. Prepare an analysis to show which product line to emphasize. Requirement 1. Identify the constraining factor for Ageo. Agee's constraint is machine hours Requirement 2. Prepare an analysis to show which product line to emphasize. Agee Products Product Mix Analysis Deluxe Standard Contribution margin per unit 73 27 Multiply by: Units produced each hour 28 56 Contribution margin per machine hour 2044 1512 Multiply by: Units produced each hour Total contribution margin at capacity 4700 4700 9606800 7106400 Decision:
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