Sammamish Brick, Inc., manufactures bricks using clay deposits on the companys property. Raw clays are blended and then extruded into molds to form unfired bricks. The unfired bricks are then stacked onto movable metal platforms and rolled into the kiln where they are fired until dry. The dried bricks are then packaged and shipped to retail outlets and contractors. The bottleneck in the production process is the kiln, which is available for 3,200 hours per year. Data concerning the companys four main products appear below. Products are sold by the pallet.

	Traditional Brick	Textured Facing	Cinder Block	Roman Brick
Gross revenue per pallet	$833	$1,357	$664	$960
Contribution margin per pallet	$520	$ 632	$424	$492
Annual demand (pallets)	120	140	130	180
Hours required in the kiln per pallet	8	8	4	6

No fixed costs could be avoided by modifying how much is produced of any product.

Required:

3. What would be the total contribution margin for the production plan you have proposed?

4. The kiln could be operated for more than 3,200 hours per year by running it after normal working hours. Up to how much per hour should the company be willing to pay in overtime wages, energy costs, and other incremental costs to operate the kiln additional hours?

5. The company is considering introducing a new product, glazed Venetian bricks, whose variable cost would be $875 per pallet and that would require 12 hours in the kiln per pallet. What is the minimum acceptable selling price for this new product?

6. Salespersons are currently paid a commission of 5% of gross revenues. Will this motivate the salespersons to make the right choices concerning which products to sell most aggressively?

	Yes
	No

3. What would be the total contribution margin for the production plan you have proposed? Traditional Textured Cinder Roman Brick Facing Block Brick Total 4. The kiln could be operated for more than 3,200 hours per year by running it after normal working hours. Up to how much per hour should the company be willing to pay in overtime wages, energy costs, and other incremental costs to operate the kiln additional hours? per Maximum amount to operate the kin hour 5. The company is considering introducing a new product glazed Venetian bricks, whose variable cost would be $875 per pallet and that would require 12 hours in the kiln per pallet. What is the minimum acceptable selling price for this new product? Time required (hours) Seling price 6. Salespersons are currently paid a commission of 5% of gross revenues. Will this motivate the salespersons to make the right choices concerning which products to sell most aggressively