Jared Greenberg and Dan Zinger of Prairie Sticks Bat Company make baseball bats. They must decide on
Question:
Jared Greenberg and Dan Zinger of Prairie Sticks Bat Company make baseball bats. They must decide on the best sales mix. Assume their company has a capacity of 80 hours of lathe/ processing time available each month and it makes two types of bats, Deluxe and Premium. Information on these bats follows.
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Required
1. Assume the markets for both models of bats are unlimited. How many Deluxe bats and how many Premium bats should the company make each month? Explain. How much total contribution margin does this mix produce each month?
2. Assume the market for Deluxe bats is limited to 600 bats per month, with no market limit for Premium bats. How many Deluxe bats and how many Premium bats should the company make each month? Explain. How much total contribution margin does this mix produce eachmonth?
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
1 Deluxe Premium Selling price per unit 70 90 Variable costs per unit 40 50 Contribution margin per ...View the full answer
