Question

In: Accounting

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?

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Expert Solution

ekkarill92 answered 3 years ago
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