Question
One of Sandra's favorite things in the whole world is her grandma's banana bread. Sandra has become so obsessed with this bread that she's
One of Sandra's favorite things in the whole world is her grandma's banana bread. Sandra has become so obsessed with this bread that she's using her grandma's recipe and making it for her friends. She and her friends have tweaked the recipe so that they can make delicious banana chocolate chip muffins and banana squares, too. They've turned this into a side business, selling their items to local convenience stores. There's one problem: the baked goods are best when well-ripened bananas are used. They're often available at a reduced price. But when they're not, Sandra has to buy green bananas at full price and wait for them ripen. Here are the typical costs and selling prices for each product. Bread (per loaf) Muffin (per dozen) Squares (per dozen) Selling price $4.30 $5.40 $3.60 Variable costs 1.90 2.60 1.40 (a) Sandra would love to bake these items seven days a week, but availability of ripe bananas is a constraint. The following quantities of ripe bananas are required for each of the products Sandra makes: banana bread requires 1.25 pounds, muffins require 1.00 pound, and squares require 0.75 pounds. How much is the contribution margin per pound? (Round answers to 2 decimal places, e.g. 15.25.) Contribution margin per pound Bread Muffins $ Which product maximizes her profitability, given the constrained resource? maximize(s) her profitability. +A Squares
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