Question: 1. Memory Lane Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce four units of X per hour or three units of Y per hour, and it has 8,000 production hours available. Contribution margin is $10 for product X and $8 for product Y. What is the most profitable sales mix for this company?
2. Nokia must confront sunk costs. Why are sunk costs irrelevant in deciding whether to sell a product in its present condition or to make it into a new product through additional processing?