Question: M 7 - 1 1 ( Algo ) Prioritizing Products with Constrained Resource [ LO 7 - 2 , 7 - 7 ] Anne Sugar
MAlgo Prioritizing Products with Constrained Resource LO
Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Annes creations, only one pot can be fired in the kiln at a time. Information about each model follows:
SquareRoundSales price$ $ Variable cost$ $ Firing timehourshours
Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run.
Required:
Compute the contribution margin per unit and contribution margin per hour of firing time.
Which type of pot should Anne produce to maximize her shortterm profit?
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