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Conroy Company manufactures two products-B100 and A200. The company provided the following information with respect to these products: Estimated customer demand (in units) Selling
Conroy Company manufactures two products-B100 and A200. The company provided the following information with respect to these products: Estimated customer demand (in units) Selling price per unit B100 2,800 Variable expenses per unit $ 1,200 $ 700 A200 2,000 $2,100 $1,200 The company has four manufacturing departments-Fabrication, Molding, Machining, and Assemble & Pack. The capacity available in each department (in hours) and the demands that one unit of each of the company's products makes on those departments is as follows: Fabrication Molding Machining Assemble & Pack B100 A200 (hours per unit) (hours per unit) 1 2 2 0 2 2 2203 Capacity (in hours). 4,000 6,000 5,000 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. 4. In the Excel template, navigate to the "Requirement 4" tab. Using Solver: a. Calculate the maximum contribution margin the company can earn given the capacities of its four manufacturing departments. b. How many units of each product would the company produce to earn the contribution margin from requirement 4a? c. Is your answer to requirement 4a greater than, less than, or equal to your answer from 3d? d. Which of the following best explains the reason for the answer to requirement 4c? Calculate the maximum contribution margin the company can earn given the capacities of its four manufacturing departments. How many units of each product would the company produce to earn the contribution margin from requirement 4a? Contribution Margin Analysis Conroy Company Volume Trade-Off Decisions with More Than One Constraint Departmental Data: Hours Demanded per Unit and Capacity Available B100 A200 Units sold Fabrication Selling price $ 1,200 $ 2,100 Variable expense per unit $ 700 $ 1,200 Molding Machining Contribution margin per unit $ 500 $ 900 Assemble & Pack Contribution margin per hour B100 A200 Sales $ $ Variable expenses $ $ Contribution margin $ $ - Total $ $ $ Fabrication Molding Machining Assemble & Pack B100 A200 (Hours per Unit) (Hours per Unit) Capacity (in Hours) 1 2 4,000 2 2 6,000 2 0 5,000 0 3 4,500 Departmental Data: Used vs. Unused Capacity (in Hours) B100 A200 Used B100 Max Units A200 Max Units Unused 4,000 6,000 5,000 4,500
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