Question - Britt Products, located in Green Bay, Wisconsin, produces two lines of electrical toothbrushes; Deluxe and Standard. Because Britt can sell all the toothbrushes it produces, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data:
Sales price per unit: Deluxe-$90, Standard-$54
Variable expenses per unit: Deluxe-$21, Standard-$17
Contribution margin: Deluxe-$69, Standard-$37
Contribution margin ratio: Deluxe-76.7%, Standard-68.5%
After expansion, the factory will have a production capacity of 4,700 machine hours per month. The plant can manufacture either 55 Standard electric toothbrushes or 26 Deluxe electric toothbrushes per machine hour.
1) Identify the constraining factor for Britt Products.
-Direct materials?
-Labor hours?
-Machine hours?
2) Prepare an analysis to show which product line to emphasize.