Question

Data table provided

Brann Products, located in Newark, New Jersey, produces two lines of electric toothbrushes: Deluxe and Standard. Because Brann can sell all the toothbrushes it produces, the owners are expanding the plant. They are deciding which product line to emphasize. To make this decision, they assemble the following data: After expansion, the factory will have a production capacity of 4,900 machine hours per month. The plant can manufacture either 60 Standard electric toothbrushes or 25 Deluxe electric toothbrushes per machine hour. Requirements 1. Identify the constraining factor for Brann Products 2. Prepare an analysis to show which product line to emphasize. (Click the icon to view the data.) Requirement 1. Identify the constraining factor for Brann. Brann's constraint is X i Data Table Requirement 2. Prepare an analysis to show which product line to emphasize. Brann Products Product Mix Analysis Deluxe Standard Per Unit Deluxe Standard Toothbrush Toothbrush Sales price ....$ 88 $ 50 Variable expenses. 18 15 Contribution margin ..................$ 70 $ 35 Contribution margin ratio .......... 79.5% 70% Decision: [Print [ Done] Print Done

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Answer 1

1.

Constraining factor for Brann products is the limited availability of machine hours.

2.

Brann Products
Product Mix Analysis
	Deluxe	Standard
Selling price per unit	88	50
Variable cost per unit	18	15
Contribution margin per unit	70	35
Machine hours per unit	1/25	1/60
Contribution margin per hour	70 x 25 = $1,750	35 x 60 = $2,100

Since contribution margin per machine hour for Standard is higher, hence, standard line should be emphasized.

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