Question

Conroy Company manufactures two products-B100 and A200. The company provided the following information with respect to these products: Estimated customer demand (in units) Selling price per unit Variable expenses per unit B100 2,800 $ 1,200 $ 700 A200 2,000 $2,100 $1,200 The company has four manufacturing departments-Fabrication, Molding, Machining, and Assemble & Pack. The capacity available in each department (in hours) and the demands that one unit of each of the company's products makes on those departments is as follows: B100 (hours per unit) A200 (hours per unit) Fabrication Molding Machining Assemble & Pack Capacity (in hours) 4,000 6,000 5,000 4,500 wo The company is trying to decide what product mix will maximize profits. Given that its fixed costs will not change regardless of the chosen mix, the company plans to identify the product mix that maximizes its total contribution margin.

Answer 1

	Contribution Margin Analysis					Departmental Data
		B100	A200			B100	A200	Capacity in hours	B 100 Max Units	A200 Max Units
	Unit Sold				Fabrication	1	2	4000	4000	(4000/1)
	Selling Price	1200	2100		Molding	2	2	6000	3000	(6000/2)
	Variable Expense per unit	700	1200		Machining	2	0	5000	2500	(5000/2)
	Contribution Margin per unit	500	900		Asseble & Pack	0	3	4500
	Contribution Margin per hour	250
						Departmental Data:Used vs Unused capacity
		B100	A200	Total		B100		A200	Used	Unused (Total capacity -Used Capacity)	A units
	Sales			0	Fabrication	2500	(2500*1)		2500	1500	750
	Variable Expense			0	Molding	5000	(2500*2)		5000	1000	500	Constraining Resource
	Contribution Margin			0	Machining	5000	(2500*2)		5000	0
					Asseble & Pack			0	4500	1500
A)	Molding is the constraining Resource
B)	Product B 100'S contribution margin per hour	250	=500/2