Question - Zoom Corporation manufactures and sells three different types of binoculars. They are referred to as Good, Better, and Best binoculars. Grinding and polishing time is limited. More time is required to grind and polish the lenses used in the Better and Best binoculars. Additional information is provided below.
Product Good Better Best
Selling price $91.50 $319.50 $910.00
Variable costs and expenses 49.00 180.00 478.00
Contribution margin $42.50 $139.50 $432.00
Grinding and polishing time required 0.5 hrs 1.5 hrs 6 hrs
Ignoring the time constraint, what strategy would appear to be optimal?
The company should shift toward production of more units?
What is the contribution margin per unit of limited resource for each type of binocular?
Contribution margin per unit of limited resource GOOD $ BETTER $ BEST $
If additional grinding and polishing time could be obtained, how should the additional capacity be used?