Question
The senior management at Davis Watercraft would like to determine if it is possible to improve firm profitability by changing their existing product mix. Currently,
The senior management at Davis Watercraft would like to determine if it is possible to improve firm profitability by changing their existing product mix. Currently, the product mix is determined by giving resource priority to the highest contribution margin watercrafts. Davis Watercraft always has a contingent of 10 workers on hand; each worker is paid
$2020
per hour. Overhead costs are
$45 comma 00045,000
per week. The plant operates 18 hours per day and 6 days per week. Labor is considered a fixed expense because workers are paid for their time regardless of their utilization. The production manager has determined that workstation 1 is the bottleneck. Detailed production information is provided below.
LOADING...
Model | |||
A | B | C | |
Price | $370370 | $310310 | $405405 |
Material costs | $5050 | $3030 | $105105 |
Weekly demand | 120120 | 9090 | 4848 |
Processing Time Station 1 | 4848 | 00 | 2424 |
Processing Time Station 2 | 00 | 00 | 4848 |
Processing Time Station 3 | 88 | 4848 | 00 |
Processing Time Station 4 | 1616 | 2424 | 3232 |
a. Using the traditional method, which bases decisions solely on a product's contribution to profits and overhead, what is the product mix that yields the highest total profit? (Enter your responses rounded to the nearest whole number.)
A | B | C | |
Product mix |
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started