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Cris Bonser, majority stockholder and president of Sudsy Soap Co., is working with her top managers on future. plans for the company. As the
Cris Bonser, majority stockholder and president of Sudsy Soap Co., is working with her top managers on future. plans for the company. As the company's managerial accountant, you've been asked to analyze the following situations and make recommendations to the management team. Division C also produces two product lines. Because the division can sell all of the product it can produce, Bonser is expanding the plant and needs to decide which product line to emphasize. To make this decision, the division accountant assembled the following data: Sales Price Variable Costs Contribution Margin Contribution Margin Ratio Per Unit K707 G582 $ 84 $ 50 24 21 $ 60 $ 71% 29 58% After expansion, the factory will have a production capacity of 4,700 machine hours per month. The plant can manufacture either 40 units of K707s or 62 units of G582s per machine hour. a. Identify the constraining factor for Division C. b. Prepare an analysis to show which product line to emphasize. c. What recommendation would you recommend to management and why?
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