Question

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Mountain Goat Cycles also makes saddle bags for its bicycles. There are two types, the Mountain bag and the Touring bag.

	Mountain	Touring
Selling price per unit	$25	$30
Variable cost per unit	$10	$18
Contribution Margin per unit	$15	$12
Contribution Margin ratio	60%	40%

At Mountain Goat, the stitching machine is the constrained resource (or bottleneck). Additional information is as follows:

• The stitching machine has a capacity of 2400 minutes per week.
• The Mountain bag requires 1 minute of stitching time
• The Touring bag requires ½ minute of stitching time
• Current demand for the Mountain bag is 2000 units per week
• Current demand for the Touring bag is 2400 units per week.

Based on the above information, how many units of each bag should be produced to utilize the constrained resource to its fullest and get the most money for the company? (Support your work with numbers.)

Answer 1

Pleas find answer in attached images

stotemant showing the Contribution pe machine which is contrained Resouce. minitue Touring mountain Panticuless Selling price per unit ) variable Cost p.U 25 30 10 18 12. 15 Contribution per unit to require No of minites 2 min L min bng manufacture One rataibe Contri bution per 15 Minute LA1B) Allocation of Ranicing besed on the highest Contribution Per minute cs Scanned with CamScanner

Ranieing minutes to bagy based on machine Allocation or Total minutes Balance machine NO 05 minutes Consumed minutes Particulors units. Per Bag 2400. Total available minutes Per week- 1200. 1200 0.5 minit less'. To be u sed to Touring 2400 as per Kanking bag Lss', Balance minutes are 1 min 1200. 1200 to be used to Stich moontain bag Scanned with CS CamScanner

be Stiched Total No ot bags To there tor is. most money to get the Touring bags bags 2400, 1200. Mountain Scanne CS Cams