Fisher Company produces two types of components for airplanes: A and B, with unit contribution margins of
Question:
Fisher Company produces two types of components for airplanes: A and B, with unit contribution margins of $400 and $600, respectively. The components pass through three sequential processes: cutting, welding, and assembly. Data pertaining to these processes and market demand are given below (weekly data).
Resource Resource Available Resource Usage(A) Resource Usage(B)
Cutting 300 machine hours 6 hours 10 hours
Welding 308 Welding hours 10 hours 6 hours
Assembly 400 labor hours 4 hours 10 hours
Market demand(A) 50 1 unit 0 units
Market demand(B) 40 0 units 1 unit
What if Fisher Company had 10 additional machine hours (cutting) with all other resources held constant? What is the new optimal mix?
What is the associated total contribution margin? Round the units of A and B to 2 decimal places and round intermediate calculations and your final answer to the nearest dollar.
What is the incremental benefit per machine hour caused by the additional 10 hours, if any?
Expert Answer:
To determine the new optimal mix and associated total contribution margin with 10 additional machine hours for cutting we need to reassess the resourc... View the full answer
