1. Product Decisions Under Bottlenecked Operations

   Mill Metals Inc. has three grades of metal product, Type 5, Type 10, and Type 20. Financial data for the three grades are as follows:

   	Type 5		Type 10		Type 20
   Revenues	$43,000		$49,000		$56,500
   Variable cost	$34,000		$28,000		$26,500
   Fixed cost	8,000		8,000		8,000
   Total cost	$42,000		$36,000		$34,500
   Income from operations	$ 1,000		$13,000		$22,000
   Number of units	5,000		5,000		5,000
   Income from operations per unit	$0.20		$2.60		$4.40

   Mill's operations require all three grades to be melted in a furnace before being formed. The furnace runs 24 hours a day, 7 days a week, and is a A condition that occurs when product demand exceeds production capacity.production bottleneck. The furnace hours required per unit of each product are as follows:

   Type 5:	6 hours
   Type 10:	6 hours
   Type 20:	12 hours

   The Marketing Department is considering a new marketing and sales campaign.

   Which product should be emphasized in the marketing and sales campaign in order to maximize profitability?

   • Type 5
   • Type 10
   • Type 20

   Determining the unit contribution margin per furnace hour will assist in making your decision. Round the unit contribution margin to two decimal places.

   	Type 5		Type 10		Type 20
   Unit contribution margin per furnace hour	$		$		$