Problem:
Britt, located in St. Cloud, Minnesota, produces two lines to electric toothbrushes: deluxe and standard. Because Britt can sell all the toothbrushes it can produces, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data given:
After expansion, the factory will have a production capacity of 4,300 machine hours per month. the plant can manufacture either 65 standard elecetric toothbrushes or 23 deluxe electric toothbrushes per machine hour.
|
|
|
|
|
Per Unit |
|
|
|
Deluxe
Toothbrushes |
|
Standard
Toothbrushes |
|
|
|
|
|
|
| Sale Price |
|
|
$80 |
|
$58 |
| Variable Expense |
|
|
21 |
|
19 |
| Contribution margin |
|
|
$59 |
|
$39 |
| Contribution margin ratio |
|
|
73.80% |
|
67.20% |
Question 1. Identify the constraining factor for Britt.
Question 2. Prepare an analysis to show which product line to emphasize.