Question: Theory of constraints, contribution margin, sensitivity analysis. Damon Furniture (DF) produces fiberglass doors in two processes: molding and finishing. DF is currently producing two models: Masoline and Aldernite. Production in the molding department is limited by the amount of materials available. Production in the finishing department is limited by the amount of trained labor available. The only variable costs are materials in the molding department and labor in the finishing department. Following are the requirements and limitations by model and department:
The following requirements refer only to the preceding data. There is no connection between the requirements.
1. If there were enough demand for either door, which door would DF produce? How many of these doors would it make and sell?
2. If DF sells three Masoline for each Aldernite, how many doors of each type would it produce and sell? What would be the total contribution margin?
3. If DF sells three Masoline for each Aldernite, how much would production and contribution margin increase if the molding department could buy 9,000 more pounds of materials for $3 per pound?
4. If DF sells three Masoline for each Aldernite, how much would production and contribution margin increase if the assembly department could get 780 more labor hours at $15 per hour?