Question

Gallery Corporation makes two products, footballs and baseballs. Additional information follows: Footballs Baseballs Units 2,000 3,000 Sales $60,000 $25,000 Variable costs 24,000 13,750 Fixed costs 10,000 5,250 Net income $26,000 $ 6,000 Yards of leather per unit 1.25 0.25 Profit per unit $13.00 $2.00 Contribution margin per unit $18.00 $3.75 Assume that Gallery is able to order an additional 2,000 yards of leather and wishes to maximize its income. Of the additional units it produces, at least 400 of each product are necessary for sales.

Instructions How many units of each must be produced?

Answer 1

			Footballs	Baseballs
	a	Contribution Margin Per Unit	$    18.00	$       3.75
	b	Yards of leather per unit	1.25	0.25
	c	contirbution margin per yard	$    14.40	$    15.00
		(a/b)
	d	Ranking	II	I
	From the above table it is clear that company need to give priority for production
	of Baseballs because it will give more contribution margin.
	However company need to be produced minimum 400 units of footballs
	500 Units Of Football will consume			500	Yards
	(400 units *1.25)
	Balance Yards (2000-500)			1500	yards
	Therefore , no of Baseballs to be produce			6000	Units
	(1500 yards /0.25 per yard)
	Therefore additional units must be produce
			Footballs	Baseballs
			400	6000
	( dear student in the question it was not given that whether we need to calculate
	only additional to be produce or overall units to be produced if question is how much
	total units to be produced answer will be as follws. It is advisable to prefer above answer
	if it shows wrong then try below one)
	Total Units
			Footballs	Baseballs
			2400	9000