Appendix B – Profitability Analysis
29. How many units of product L33Y should be produced each month?
Appendix B – Profitability Analysis
30. Up to how much should the company be willing to pay to obtain enough of the
constrained resource to satisfy demand for the two existing products?
Appendix B – Profitability Analysis
App B-23
Garwood Corporation’s two products have the following characteristics:
The constrained resource is a particular machine that is available for 10,100 minutes each
month. Each unit of product K56J requires 10 minutes on this machine and each unit of
product L72D requires 6 minutes on this machine.
Appendix B – Profitability Analysis
31. What is the maximum contribution margin the company can earn per month?
Appendix B – Profitability Analysis
32. The company is considering launching a new product that would have a variable cost of
$51.00 per unit. It would require 14 minutes of the constrained resource. The absolute
minimum acceptable selling price for the new product should be:
Appendix B – Profitability Analysis
App B-26
Burrington Products Inc. makes two products—Z74I and R53Y. Product Z74I’s selling price
is $102.00 and its unit variable cost is $71.40. Product R53Y’s selling price is $432.00 and its
unit variable cost is $302.40. The monthly demand is 2,500 units for product Z74I and 470
units for R53Y. The constrained resource is a particular machine that is available for 9,900
minutes each month. Each unit of product Z74I requires 3 minutes on this machine and each
unit of product R53Y requires 16 minutes on this machine.
Appendix B – Profitability Analysis
33. What is the maximum contribution margin the company can earn per month?
Appendix B – Profitability Analysis
34. The company is considering launching a new product that would have a variable cost of
$160.00 per unit and no avoidable fixed costs. It would require 18 minutes of the constrained
resource. The absolute minimum acceptable selling price for the new product should be:
Appendix B – Profitability Analysis
App B-29
The management of Rodwell Corporation has provided the following data concerning its two
products—E99 and V09:
The constrained resource is a particular machine that is available for 10,400 minutes each
month. Each unit of product E99 requires 8 minutes on this machine. Each unit of product
V09 requires 10 minutes on this machine.
Appendix B – Profitability Analysis
35. What is the maximum contribution margin the company can earn per month?
Appendix B – Profitability Analysis
36. The company is considering launching a new product that would have a variable cost of
$181.00 per unit. It would require 14 minutes of the constrained resource. The absolute
minimum acceptable selling price for the new product should be:
Appendix B – Profitability Analysis
App B-32
The management of Bachor Corporation has provided the following data concerning its two
products:
The constrained resource is a particular machine that is available for 9,800 minutes each
month.
Appendix B – Profitability Analysis
37. How many units of product A19D should be produced each month?
Appendix B – Profitability Analysis
38. What is the maximum contribution margin the company can earn per month?
Appendix B – Profitability Analysis
39. Up to how much should the company be willing to pay to obtain enough of the
constrained resource to satisfy demand for the two existing products?
Appendix B – Profitability Analysis
40. The company is considering launching a new product that would have a variable cost of
$53.00 per unit. It would require 4 minutes of the constrained resource. The absolute
minimum acceptable selling price for the new product should be:
Appendix B – Profitability Analysis
Shorr Corporation’s two products have the following characteristics:
The constrained resource is a particular machine that is available for 9,900 minutes each
month. Each unit of product U29D requires 16 minutes on this machine and each unit of
product X43P requires 2 minutes on this machine.
41. How many units of product U29D should be produced each month?
Appendix B – Profitability Analysis
42. What is the maximum contribution margin the company can earn per month?
Appendix B – Profitability Analysis
43. Up to how much should the company be willing to pay to obtain enough of the
constrained resource to satisfy demand for the two existing products?
Appendix B – Profitability Analysis
44. The company is considering launching a new product that would have a variable cost of
$169.00 per unit and no avoidable fixed costs. It would require 15 minutes of the constrained
resource. The absolute minimum acceptable selling price for the new product should be: