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I would like help with letter C. 47. Contribution Margin with Resource Constraints. Dolomite Company produces two different products that have the following price and
I would like help with letter C.
47. Contribution Margin with Resource Constraints. Dolomite Company produces two different products that have the following price and cost characteristics. Classic Modern Selling price per unit $200 $100 Variable cost per unit $120 $ 50 Management believes that pushing sales of the Classic product would maximize company profits because of the high contribution margin per unit for this product. However, only 23,000 machine hours are available each year, and the Classic product requires 2 machine hours per unit while the Modern model requires 1 machine hour per unit. The company sells everything it produces. Required: a. Calculate the contribution margin per unit of constrained resource for each product. b. Which product would Dolomite prefer to sell to maximize overall company profit? Explain. c. Assume in requirements a and b that Dolomite can sell as many of either product as it can produce. For part c, now assume that Dolomite can sell a maximum of 19,000 Moderns and 10,000 Classics. Given this market constraint, how many of each product should Dolomite sell and what would be the combined contribution margin. Classic Modern selling price per unit 200 100 Variable cost per unit 120 a. 50 Contribution margin per unit Hours per unit CM per hour b The Classic's contribution margin is higher than the Modern so selling Clasic product with maximize profitStep by Step Solution
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