Function: MAX; Formulas: Subtract; Divide; Cell Referencing

BE5.7 - Using Excel to Determine Profitability Given a Constrained Resource

Student Work Area

PROBLEM

Required: Provide input into cells shaded in yellow in this template. Input the required mathematical formulas or functions with cell references to the Problem area or work area as indicated.

Rachel wants to use her knitting skills to make a little extra money so she can enjoy a theatre weekend with her besties. Shes got the pattern down for a hat, scarf, and mittens, but she realizes that her available time is limited. She should be able to sell as many of any item as she can make, but she wants to make sure shes making the best use of her time. Cost and time information are provided here.

Calculate the contribution margin per unit of the scarce resource for each item.

Hat

Scarf

Mittens

Hat

Scarf

Mittens

Contribution margin per

Time in minutes

20

30

40

unit of scarce resource

Cost of yarn per unit

$4.00

$6.00

$4.00

Selling price per unit

15.00

15.00

15.00

Which item should Rachel focus on in order to maximize her profitability and resources?

The highest CM is

.