Question

Waterway Industries can produce and sell only one of the following two products: Oven Contribution Hours Required Margin Per Unit Muffins 0.2 $4 Coffee Cakes 0.3 $5 The company has oven capacity of 1500 hours. How much will contribution margin be if it produces only the most profitable product

Answer 1

$30,000

Step-by-step explanation:

Muffins Coffee Cakes

Contribution Per Unit (A) $4 $5

Oven Hours Required (B) 0.2 0.3

Contribution Per Hour $20 $16.67

Rank 1 2

Total Hours Available 1,500

Hours Required for 1 Unit of Muffin 0.2

Total Muffins Production with 1500 Hours (1,500/.2) 7,500

Contribution Per Unit $4

Total Contribution (7,500*$4) $30,000