QUESTION:

Else Limited manufactures luxurious gold jewelry and specializes in 2 types of finger rings, a Blue Sapphire Ring and a Diamond Ring. Each ring must go through a polishing machine in the Polishing Department.

Total hours available for the Polishing Department for both products is 400 hours.

There are no other constraints in the production process.

The following information is available for both products:

Blue

SapphireDiamondContribution margin per unit$1,200$900Time required to polish one unit (hours)1.0 hour0.50 hours

Using the above information answer the following questions.

What is the contribution margin per hour of Polishing Department time for the Blue Sapphire Ring?

What is the contribution margin per hour of Polishing Department time for the Diamond Ring?

Determine the optimal product mix.

Given your calculations, how many units of Blue Sapphire Ring should the company produce?

Given your calculations, how many units of Diamond Ring should the company produce?

What is the total contribution margin earned for the optimal product mix?