Westfield Corporation makes two different boat anchors-atraditional fishing anchor and a high-end yacht anchor-usingthe same production machinery. The contribution margin of the yachtanchor is three times as high as that of the other product. Thecompany is currently operating at full capacity and has been doingso for nearly two years. Ralph Sampson, the CEO, want to cutback on production of the fishing anchor so that the company canmake more yacht anchors. He says that this is a"no-brainer" because the contribution margin of theyacht anchor is so much higher.
Write a short memo to Ralph Sampson describing the analysisthat the company should do before it makes this decision and anyother considerations that would affect the decision.