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Viva Company produces four products, A1,B1,C1 and D1. Data concerning the four products follow (per unit): All the products must be processed through machine Q2X
Viva Company produces four products, A1,B1,C1 and D1. Data concerning the four products follow (per unit): All the products must be processed through machine Q2X that can operate for 4,000 per period. 1. Are there enough materials to satisfy the required demand? And why? 2. Compute the contribution margin for each product per units of the constraint resource. Rank the products based on the relative profitability from highest to lowest. 3. Show in detail the optimum production plan. 4. Compute the total contribution margin based on the optimum production plan. 5. The company production manager is suggesting to add an innovative new product (Product E1) to the production line, which is expected to be popular. This product will require 1 hour of processing on machine Q2X and will consume variable expenses of only $30 per unit. The sales manager is seeking your help to determine the minimum selling price that must be charged to introduce this line as a replacement for the product with the lowest CM per constraint resource. Explain your answer. (1 mark) [Challenging level]
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