Question

Zoom Corporation manufactures and sells three different types of binoculars. They are referred to as Good, Better, and Best binoculars. Grinding and polishing time is limited. More time is required to grind and polish the lenses used in the Better and Best binoculars. Additional information is provided below. Product Good Better Best Selling price $95.80 $304.50 $909.00 Variable costs and expenses 49.00 181.00 483.00 Contribution margin $46.80 $123.50 $426.00 Grinding and polishing time required 0.6 hrs 1.3 hrs 6 hrs Ignoring the time constraint, what strategy would appear to be optimal? The company should shift toward production of more units. LINK TO TEXT What is the contribution margin per unit of limited resource for each type of binocular? Good Better Best Contribution margin per unit of limited resource $ $ $ LINK TO TEXT If additional grinding and polishing time could be obtained, how should the additional capacity be used? Additional capacity should be used to make binoculars. Click if you would like to Show Work for this question: Open Show Work

Answer 1

1	If no limitations or scarce resourse, priority should be given to the Best binoculars because it
	has the highest contribution margin per unit and then the Better, because it has the
	second-highest contribution margin.
2	Product	Good	Better	Best
	Selling price	$95.80	$304.50	$909.00
	Variable costs and expenses	49	181	483
	Contribution margin	$46.80	$123.50	$426.00
	Grinding and polishing time required	0.6 hrs	1.3 hrs	6 hrs
	Contribution margin per grinding and polishing hour	$78	$95	$71
3	If additional grinding and polishing time could be obtained, the production of Better should be
	prioritized, followed by Good and lastly Best.