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 3,125 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	$ 1,396	$ 658	$ 956
Contribution margin per pallet	$ 520	$ 650	$ 420	$ 490
Annual demand (pallets)	115	135	125	175
Hours required in the kiln per pallet	10	10	4	5

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

4. The kiln could be operated for more than 3,125 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?

Maximum amount to operate the kiln

per hour

5.

The company is considering introducing a new product, glazed Venetian bricks, whose variable cost would be $870 per pallet and that would require 11 hours in the kiln per pallet. What is the minimum acceptable selling price for this new product?

Time required (hours)
Selling price		$0