Question
The date is January 1, 2023 and Pasta Pros (PP) is currently facing a major decision. For years, PP has always produced pasta and they
The date is January 1, 2023 and Pasta Pros (PP) is currently facing a major decision. For years, PP has always produced pasta and they have become well known in their local market. PP is small and family owned and as a result they are limited in their production capabilities based on the 50 hour work week for the three production staff members. PP has been producing at full capacity and matching demand for several years and they have always sold all their pasta. Currently, PP is able to produce 5 packages of pasta per hour per production member. PP believes that they could comfortably add lasagna to their offerings and could likely produce 8 lasagnas per hour per employee and easily sell 240 per week. Pasta generates $10.00 of contribution margin while the lasagna generates $8 of contribution margin (CM).
Instructions:
How many units should be produced of each and what is the maximum available CM per week based on the ideal production levels?
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