10 67 value of a constrained resource the additional

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Unformatted text preview: ts of Product 1, which had a contribution margin per minute of $24. Ensign should be willing to pay up to $24 Ensign should be willing to pay up to $24 Ensign per minute. This amount equals the per minute. This amount equals the contribution margin per minute of machine contribution margin per minute of machine time that would be earned producing more time that would be earned producing more units of Product 1. units of Product 1. 10-68 Quick Check Colonial Heritage makes reproduction colonial furniture from select hardwoods. Chairs Selling price per unit $80 Variable cost per unit $30 Board feet per unit 2 Monthly demand 600 Tables $400 $200 10 100 The company’s supplier of hardwood will only be able to supply 2,000 board feet this month. Is this enough hardwood to satisfy demand? a. Yes b. No 10-69 Quick Check Colonial Heritage makes reproduction colonial furniture from select hardwoods. Chairs Selling price per unit $80 Variable cost per unit $30 Board feet per unit 2 Monthly demand 600 Tables $400 $200 10 100 The company’s supplier of hardwood will only be able to supply 2,000 board feet this month. Is this enough hardwood to satisfy demand? a. Yes b. No (2 × 600) + (10 × 100 ) = 2,200 > 2,000 (2 10-70 Quick Check Chairs Selling price per unit $80 Variable cost per unit $30 Board feet per unit 2 Monthly demand 600 Tables $400 $200 10 100 The company’s supplier of hardwood will only be able to supply 2,000 board feet this month. What plan would maximize profits? a. 500 chairs and 100 tables b. 600 chairs and 80 tables c. 500 chairs and 80 tables d. 600 chairs and 100 tables 10-71 Quick Check Chairs Selling price per unit $80 Variable cost per unit price $30 Selling Board feet per unit Variable cost2 Monthly demand 600 Tables Chairs Tables $400 $200 80 $ 400 $ 10 30 200 100 Contribution margin $ Board feet The company’s supplier of hardwood will CM per board foot $ 50 $ 200 2 10 only 25 $ 20 be able to supply 2,000 board feet this month. What plan would maximize profits? Production of chairs 600 a. 500 chairs and 100 tables Board feet required 1,200 b. 600 chairs and 80 tables Board feet remaining 800 c. 500 chairs and 80 tables per table Board feet 10 d. 600 chairs and 100 tables of tables Production 80 10-72 Quick Check As before, Colonial Heritage’s supplier of hardwood will only be able to supply 2,000 board feet this month. Assume the company follows the plan we have proposed. Up to how much should Colonial Heritage be willing to pay above the usual price to obtain more hardwood? a. $40 per board foot b. $25 per board foot c. $20 per board foot d. Zero 10-73 Quick Check As before, Colonial Heritage’s supplier of hardwood The additional wood would be used to make will only be able this use, 2,000 board feet this tables. In to supply each board foot of month. Assume the company follows the plan we additional wood will allow the company to earn have proposed. Up to how much should Colonial an additional $20 pay above the usual price and Heritage be willing to...
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