Discussion:
Management has been reviewing company profitablity and is attempting to improve performance through better planning the company manufactures three products in the jewelry line
Necklaces Bracelets Rings
Selling price $50.00 $ 37.50 $25.00
Contribution margin $20.00 $15.00 $10.00
Machine time reqired 5 hours 25 30
Machine time is limited to 120 hours per month and demand for each product far exceed the company's ablity to produce, at the precent time Quicksilver manufactures an equal number of each product, the sales manager has urged the company to concentrate on necklace production because of its high selling price relative to rings and bracelets Quicksilver will produce no rings or braceles if it accept this recommendtion . Ignor tax
A if the fixed cost are 2,500 per month what profit will the company obtain by following the sales manager's recommendation
B what is the maximam profit obtainable and what product or product combination must be sold to obtain the maximam ( comput the contribution margin of each product per unit of constrained resource