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In: Accounting

Blend corporation produces two types of blenders. The blenders are produces using a special metal. Due...

Blend corporation produces two types of blenders. The blenders are produces using a special metal. Due to global supply chain problems, the supply of the metal is limited and Blend is able to obtain only 20,000 pounds.

Which blender should Blend produce given the following information?

                                                                                   Deluxe             Basic

Unit Selling Price                                                       $95                   $75

Unit Variable Costs                                                   57                       45

Unit Contribution Margin                                          $38                     $30

Number of Pounds of metal per blender                  4                          2.5

Required

  1. Assume that there is no shortage in metal and ample demand. Which Blender should Blend produce?
  2. Assume that Blend must produce at least 2,000 of each model to remain competitive. With the constraint of 20,000 pounds of metal, how many units of each blender will blend produce?
  3. How much will total contribution margin be when profit is maximized under the constraint of 20,000 pounds and a 2,000 minimum production?

Solutions

Expert Solution

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

ekkarill92 answered 2 years ago
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