Question
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 Annes creations, only one pot can be fired in the kiln at a time. Information about each model follows: Square Round Sales price $95 $133 Variable cost $20 $35 Firing time 2.5 hours 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.
Which type of pot should Anne produce to maximize her short-term profit?
Square Ceramic Pot
Round Ceramic Pot
Both
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