Question
What is the optimum product mix and contribution margin per minute of each product from the following extract KBL is famous for its rye bread.
What is the optimum product mix and contribution margin per minute of each product from the following extract
KBL is famous for its rye bread. Both our rye bread and white bun recipes use specialized bases, to which flour, yeast, and water are added.
Baking process It takes approximately 15 minutes to prepare the batch of rye bread (40 loaves), and 30 minutes to prepare the batch of white buns (45 dozen).
The baking time for a batch of rye bread is 40 minutes, and for a batch of white buns it's 15 minutes. Our oven can hold three batches of rye bread or one batch of white buns at a time. As required under health and safety legislation, the oven only operates 16 hours per day, 365 days a year. Right now, we seem to be operating our oven at full capacity and we are still having trouble keeping up with demand.
Batch components and yieldRye bread White buns Variable cost per batch$33.41 $38.75 Selling price $3.29 per loaf $3.09 per dozen
Demand Daily demand for our products is currently 2,400 loaves of rye bread and 900 dozen white buns. Given the growing demand for our products, some of our customers are being shorted on their orders. Some of these customers have voiced their concerns about the impact this is having on their businesses and have threatened to take their business to a competitor if we cannot service them effectively.
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