Eye Spy Corporation manufactures and sells three different types of binocu- lars. 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.
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Product
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Good
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Better
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Best
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|
Selling price
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$90.00
|
$330.00
|
$900.00
|
|
Variable costs and expenses
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50.00
|
180.00
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480.00
|
|
Contribution margin
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$40.00
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$150.00
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$420.00
|
|
Grinding and polishing time required
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0.5 hrs
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1.5 hrs
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6 hrs
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(a) Ignoring the time constraint, what strategy would appear to be optimal?
(b) What is the contribution margin per unit of limited resource for each type of binocular?
(c) If additional grinding and polishing time could be obtained, how should the additional capacity be used?