On 1/1/11, Erin Rogers ESTIMATES the following fixed PRODUCT costs:

Janitorial Salaries for manufacturing facility $40,000

Rent on Manufacturing Facility $200,000

Erin Rogers, UW-M graduate, creates the following standards for the sandwiches:

	Ham		Peanut butter&Jelly		Tuna Sandwiches
	Std.qty/sand	Std.pric/lb	Std.qty/sand	Std.pric/lb	Std.qty/sand	Std.pric/lb
Direct Materials	.2lbs/sand	$4/lb	.2lbs/sand	$3/lb	.2lbs/sand	$5/lb
Direct materials-bread	2slices/sand	$.10/slice	2slices/sand	$.10/slice	2slices/sand	$.10/slice
Direct Labor	.1 dlh/sand	$10/dlh	.2dlh/sand	$20/dlh	.2dlh/sand	$15/dlh
VOH utilities	.1mh/sand	$5/mh	.4mh/sand	$5/mh4	.2mh/sand	$5/mh
FOH janitor	.1mh/sand	$8/mh	.4mh/sand	$8/mh	.2mh/sand	$8/mh
FOH-rent	.1 dlh/sand	$10/dlh	.2dlh/sand	$10/dlh	.2dlh/sand	$10/dlh
Price/sandwich	$10/sand		$15/sand		$6/sand.
Annual Demand	4000		5000		6000

Compute the GROSS MARGIN in terms of total $s for all 3 products.

Ham ($10/sand - $4.30/sand) = $5.70/sandwich; PB&J ($15/sand-$12/sand)=$3/sand; Tuna($6-$8.8)=($2.8/sand).

Compute the CONTRIBUTION margin in terms of total $s for all 3products.

Ham ($10/sand - $2.50/sand) = $7.50/sandwich; PB&J ($15/sand-$6.8/sand)=$8.2/sand; Tuna($6-$5.2)=$0.8/sand.

Abbott is thinking about discontinuing the Tuna Sandwich product line. If it does so, it will reduce the janitorial salaries by $1,000. Should Abbott discontinue the Tuna sandwiches line? Why or why not and

Assume that the toaster/machine can only run a total of 1100 hours or it will break. How many of each sandwich should abbott make? Show your work.