Question
Crane Manufacturing produces thermal tents and sleeping bags. The companys products are in high demand due to the quality and durability of the products. Crane
Crane Manufacturing produces thermal tents and sleeping bags. The companys products are in high demand due to the quality and durability of the products. Crane estimates it could sell 600 tents per month and 600 sleeping bags per month. Following is information for each of these products:
Tent | Sleeping Bag | |||
---|---|---|---|---|
Selling price per item | $92.00 | $67.00 | ||
Variable cost per item | 79.00 | 51.00 | ||
Contribution margin per item | $13.00 | $16.00 | ||
Machine hours per item | 1.00 | 1.00 |
Crane has 1034 machine hours available each month. In order to maximize the companys total contribution margin, how should Mallory allocate its production capacity between the tents and sleeping bags?
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