Question
You own a factory that hand-manufactures cardigans and pullover sweaters. Both use the same amount of material, but the cardigan requires 2 labor hours to
You own a factory that hand-manufactures cardigans and pullover sweaters. Both use the same amount of material, but the cardigan requires 2 labor hours to produce, while the pullover requires only 1.5 hours. The cardigan sells for $50 and has variable costs of $28. The pullover sells for $45 and has variable costs of $20. You're only able to employ workers for 2,000 total hours per month.
a. What is the unit of constrained resource in this scenario, and how much contribution margin does each sweater type provide per unit of constrained resource?
b. How many of each sweater type should this factory produce?
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