Consider a long forward contract to purchase a non-dividend-paying stock in 3 months. Assume the current stock price is $40 and
1 answer:
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Answer:
The company should produce 7,500 bread machines to maximize profit
Explanation:
Given:
Toaster Ovens Bread Machines
Sales Price per unit 60 135
Less: variable cost per unit 38 75
Contribution Margin per unit 22 60
Machine hours per unit 1 2
Now,
Contribution Margin per Machine Hour =
thus,
Contribution Margin per Machine Hour 22 30
Since,
The Contribution Margin per Machine Hour for the bread is more, therefore to maximize profits the kitchen company should produce Breads machines.
also,
Number of units to be produced =
=
= 7,500 units