Refer to the information for Relax Spas above. Assume that a maximum of 8,000 massages of each

Question:

Refer to the information for Relax Spas above. Assume that a maximum of 8,000 massages of each type can be sold.

Relax Spas provides two types of massage services, the Full Body and the Trouble Spots, with unit contribution margins of $198 and $90, respectively. Regardless of type, each massage requires the use of a certified masseuse. Relax Spas has four masseuses on staff who each work 1,500 hours per year. Each Full Body massage uses 90 minutes of masseuse time, and each Trouble Spot massage uses 30 minutes of masseuse time.

Required:

1. What is the contribution margin per hour of masseuse time for each type of massage?

2. What is the optimal mix of massages?

3. What is the total contribution margin earned for the optimal mix?

Contribution Margin
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...