Question

After expansion, the factory will have a production capacity of 4,200 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 Brik Products. 2. Prepare an analysis to show which product line to emphasize.

Answer 1

Solution:

Solution 1) The constraining factor for Brik Products is the number of machine hours.

Explanation: As it has been mentioned that Brik can sell all the toothbrushes it produces, the machine hours is the only constraining factor.

Solution 2) Calculation of Total number of units of the product to be manufactured in a month

	Deluxe Toothbrushes	Standard Electric Toothbrushes
Total Machine Hours per Month (Hours) (A)	4,200	4,200
Number of Units Manufactured per Machine Hour (B)	25	60
Total Number of Units to be manufactured per month = (A) x (B)	1,05,000	2,52,000

Therefore, the company can either manufacture 105,000 units of Deluxe Toothbrushes or 252,000 units of Standard Electric Toothbrushes.

Analysis of profitability of the Product lines:

	Deluxe Toothbrushes		Standard Electric Toothbrushes
	Total $ (105,000 Units)	Per Unit $	Total $ (252,000 Units)	Per Unit $
Sales	88,20,000.00	84.000	1,26,00,000.00	50.000
Less: Variable Expenses	22,05,000.00	21.000	40,32,000.00	16.000
Contribution Margin	66,15,000.00	63.000	85,68,000.00	34.000

As the Contribution Margin of Standard Electric Toothbrushes is more, the Brik Products should emphasize on the manufacturing of Standard Electric Toothbrushes.