Question
Burnett Company produces two products, Weebles and Wobbles, both of which require the use of the same machine. The machine is available to operate for
Burnett Company produces two products, Weebles and Wobbles, both of which require the use of the same machine. The machine is available to operate for a total of 4,000 hours per year. The following information relates to the two products:
Weebles Wobbles
Sales Price $200 $300
Variable Costs 100 150
Machine Time to make one unit 1 hour. 2 hours
Maximum Units that can be sold 3,000 1,500
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Without considering the constraint, what is each products contribution margin? (Show calculations)
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Given the machine hours constraint, what is each products CM per hour of constraint? (Show calculations)
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Given the machine hours constraint, if the company wanted to maximize its total contribution margin, what mix of Weebles and Wobbles would the company manufacture? (Show your calculations)
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