Task 2 (10 marks) (approximately 500 words)

Easton Corporation makes two different boat anchorsa traditional fishing anchor and a high-end

yacht anchorusing the same production machinery. The contribution margin of the yacht anchor is

three times as high as that of the other product. The company is currently operating at full capacity

and has been doing so for nearly two years. Bjorn Borg, the companys CEO, wants to cut back on

production of the fishing anchor so that the company can make more yacht anchors. He says that

this is a no-brainer because the contribution margin of the yacht anchor is so much higher.

Required

Write a short memo to Bjorn Borg describing the analysis that the company should do before it

makes this decision and any other considerations that would affect the decision.