Question
The Yankee Factory sells candles, specialized candles, and room diffusers. The factory is experiencing a bottleneck in melting hours and is trying to determine which
The Yankee Factory sells candles, specialized candles, and room diffusers. The factory is experiencing a bottleneck in melting hours and is trying to determine which item is more profitable. Even though the company may have to limit the orders that it takes, Yankee is concerned about customer service and satisfaction.
|
Candles |
Specialized Candles |
Room Diffusers |
Sales price | $20.00 | $45.00 | $60.00 |
Variable cost per item | $5.00 | $12.00 | $20.00 |
Hours needed to melt and finish |
1 hour |
2.5 hours |
2 hours |
REQUIRED: (Show all your work)
(a) Calculate the contribution margin per hour per item.
(b) Determine which items the company should try to sell more of first, second, and then last.
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