Small Stool

Selling price per unit: 120

Variable Cost per unit: 48

Amount of material used to produce a unit in grams: 200

Market Capacity: 8,400

Large Stool

Selling price per unit: 260

Variable Cost per unit: 117

Amount of material used to produce a unit in grams: 400

Market Capacity: 5,400

1. What is the contribution margin per gram of material for the small stool?

2. What is the contribution margin per gram of material for the large stool?

3. Can we fulfill the market capacity for the privileged stool?

4. Recommendation to produce the following number of units to maximize profitability with the given limited resource for a small stool:

5. Recommendation to produce the following number of units to maximize profitability with the given limited resource for a large stool: