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Unformatted text preview: 15-2015-31 (continued)Notice that at this optimal production mix of 3,200 Jigs and 800Boppers, excess demand for 200 Boppers remains. The company could sellmore Boppers, but it prefers not to because producing more Boppers tosell would be possible only if fewer Jigs are produced for sale. Thus,there would be no reason for the company to increase this excess demandby an additional 200 units. That is, the maximum total contributionmargin which could be earned would not increase because the bestproduction mix is still 3,200 Jigs and 800 Boppers. On the other hand,if demand for Jigs increased by 200 units (to 3,400 units), the companywould change its plan as follows:First, produce 3,400 Jigs, use 850 hours and earn $102,000Next, produce 700 Boppers, use 350 hours and earn 31,500Now, the best use of the total 1,200 hours earns $133,500contribution margin for the company.contribution margin for the company....
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This homework help was uploaded on 04/08/2008 for the course ACC 102 taught by Professor Drucker during the Fall '07 term at Coastal Carolina University.
- Fall '07