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Because of your love of condiments (especially on a hot dogt), you have been following the happenings at the local bottling plant. Last week, a
Because of your love of condiments (especially on a hot dogt), you have been following the happenings at the local bottling plant. Last week, a newspaper article mentioned slowdowns there due to operational issues, which was intriguing since it's a topic voure studying at school right now, Lucky for you, one of the plant managers was already planning a visit to your classroom, Ashe spoke, he began with a puzzle for your class to solve: - We bottle three primary products in our plant: ketchyp, mustard, and relish. Our operations manager has always pot priority on our highest contribution margin product. That makes sense, right? But a few months ago, we went old school for our ketchup and started bottling it in classic tall, slender giass bottles. Our customers actually enioy having to give the bottle a whack to get the product flowing. Since that switch, though, our production department can't scem to meet the budget:" The plant manger then showed the class the following information. The plant manager then said. "The puzzle Kim not sure if we are maximizinic the profitabilityot our bjetting capocity angmore whut do vouthink? Assume that after the switch to glass bottles, the following cost relationship exists for all three products: variable costs are 20% of selling price. Given this information, what must be the current contribution margin per unit for each of the three products? Further, in what order should the company now rank its products in terms of profitability if the bottling activity is its primary constraint? (Round answers to 2 decimal places, eg. 15.25.)
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