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Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the
Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne's creations, only one pot can be fired in the kiln at a time. Information about each model follows: Sales price Variable cost Firing time Square $116 $56 2.5 hours Round $142 $72 3.5 hours Assume that Anne can sell as many pots as she can create but that she is limited as to the number of hours that the kiln can be run. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot Contribution Margin per Unit Contribution Margin per Hour Which type of pot should Anne produce to maximize her short-term profit? Square Ceramic Pot O Round Ceramic Pot O Both E7-15 (Algo) Making Decisions Involving Constrained Resource [LO 7-2, 7-7] Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows: Sales price Variable costs per unit Fixed costs per unit Required number of labor hours Product A $38.00 20.00 6.00 1.25 Product B $48.00 21.00 6.00 2.00 Product c. $78.00 40.00 6.00 2.50 Cordova currently is limited to 40,000 labor hours per month. Required: Assuming an infinite demand for each of Cordova's products, determine contribution margin per direct labor hour. (Round your answers to 2 decimal places.) Which product would be Cordova's first choice to produce? O Product B O Product C O Product A E7-16 (Algo) Making Decisions Involving Constrained Resource [LO 7-2, 7-7] Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows: Sales price Variable costs per unit Fixed costs per unit Required number of labor hours Product A $ 54.00 18.80 4.00 2.00 Product B $64.00 10.25 4.00 2.50 Product C $94.00 26.80 4.00 4.00 Cordova currently is limited to 60,000 labor hours per month. Cordova's marketing department has determined the following demand for its products: Product A Product B Product C 14,000 units 10,000 units 6,000 units Required: Given the company's limited resource and expected demand, compute how many units of each product Cordova should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first. Round your answers to the nearest whole number.) Product Units Produced
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