PRODUCT 1 PRODUCT 2 Demand 80 80 Time/Unit 30 20 Sale Price 50 30 Variable Cost/Unit...

PRODUCT 1		PRODUCT 2
Demand	80		80
Time/Unit	30		20
Sale Price	50		30
Variable Cost/Unit	10		5
Contribution Margin/Unit	40		25
Contribution Margin Ratio	60%		40%
Contribution Margin/Unit of Time	0.33		0.50

Assume the maximum time allowed is only 3,900 per day.
Calculate and compare the profitability of the following scenarios:
I. The product with the highest contribution margin prioritized.
II. The product with the highest contribution margin per unit of constrained resource is prioritized.
B
How do managers ensure the optimal usage of constrained resources?

Expert Solution

ekkarill92 answered 2 years ago

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