Question
Conroy Company manufactures two productsB100 and A200. The company provided the following information with respect to these products: B100 A200 Estimated customer demand (in units)
Conroy Company manufactures two productsB100 and A200. The company provided the following information with respect to these products:
B100 | A200 | |||||
Estimated customer demand (in units) | 2,800 | 2,000 | ||||
Selling price per unit | $ | 1,200 | $ | 2,100 | ||
Variable expenses per unit | $ | 700 | $ | 1,200 | ||
The company has four manufacturing departmentsFabrication, Molding, Machining, and Assemble & Pack. The capacity available in each department (in hours) and the demands that one unit of each of the companys products makes on those departments is as follows:
B100 (hours per unit) | A200 (hours per unit) | Capacity (in hours) | ||||||
Fabrication | 1 | 2 | 4,000 | |||||
Molding | 2 | 2 | 6,000 | |||||
Machining | 2 | 0 | 5,000 | |||||
Assemble & Pack | 0 | 3 | 4,500 | |||||
The company is trying to decide what product mix will maximize profits. Given that its fixed costs will not change regardless of the chosen mix, the company plans to identify the product mix that maximizes its total contribution margin. Click here to download the Excel template, which you will use to answer the questions that follow.
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rev: 01_20_2021_QC_CS-246235
3. Refer to the Requirements 1-3 tab in your Excel spreadsheet. Based on the answers to requirements 1 and 2: a. Which product has the highest contribution margin per hour of its constraining resource? b. If the company decided to initiate production by maximizing the output of the product chosen in requirement 3a, then how many units of this product would it be able to make before encountering that products constraint? c. If the company implemented the production plan in requirement 3b, then how many units of its remaining product could it make with the capacity that is still available? (Hints: Your answer from requirement 3b should be input into one of two choices, either cell B7 or C7. Then, you should direct your attention to the unused capacities in cells J15 through J18.) d. What total contribution margin would the company earn if it followed the production plan described in requirements 3b and 3c? (Hint: Your answer from requirement 3c should be input into one of two choices, either cell B7 or C7.)
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