Branson Products, Inc., located in Orlando, Florida, produces two lines of electric toothbrushes: Deluxe and Standard. Because Branson can sell all the toothbrushes it can produce, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data:
_______________________________________________________Per Unit
___________________________________________Deluxe Toothbrush Regular Toothbrush
Sale price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$80......................$50
Variable expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22.......................16
Contribution margin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $58.....................$34
Contribution margin ratio . . . . . . . . . . . . . . . . . . . . . . . . . . .72.5%..........................68%
After expansion, the factory will have a production capacity of 4,600 machine hours per month. The plant can manufacture either 68 Standard electric toothbrushes or 28 Deluxe electric toothbrushes per machine hour.
Requirements
1. Identify the constraining factor for Branson.
2. Prepare an analysis to show which product line to emphasize.