Question

Sports Specialists makes baseballs and softballs in a three-step process. Unfortunately, the sewing machine process has been identified as a bottleneck. Each softball has a contribution margin of $9.00 and each baseball has a contribution margin of $3.00. The sewing machine can make 10 softballs or 25 baseballs in one hour.
A. If demand for both products is unlimited and the sewing machine capacity cannot be expanded. Calcuate the Contribution margin/hour for each product.
Contribution
Margin/hour
Softballs
Baseballs
B. If demand for each ball is limited to 7,000 balls and there are 900 hours available on the machine, how many of each product should be produced?
Softballs
Baseballs

Answer 1

Answer:

A) The contribution margin per hour for softballs is $ 90, while the contribution margin per hour for baseballs is $ 75.

B)  Only baseballs should be produced to maximize results.

Explanation:

Since Sports Specialists makes baseballs and softballs in a three-step process, but unfortunately, the sewing machine process has been identified as a bottleneck, and each softball has a contribution margin of $ 9.00 and each baseball has a contribution margin of $ 3.00, and the sewing machine can make 10 softballs or 25 baseballs in one hour, A) if demand for both products is unlimited and the sewing machine capacity cannot be expanded, to calculate the contribution margin / hour for each product and B) if demand for each ball is limited to 7,000 balls and there are 900 hours available on the machine, to determine how many of each product should be produced, the following calculations must be performed:

A)

Softballs: 9 x 10 = 90

Baseballs: 3 x 25 = 75

Therefore, the contribution margin per hour for softballs is $ 90, while the contribution margin per hour for baseballs is $ 75,

B)

7000/25 = 280

280 x 25 x 3 + 0 x 10 x 9 = 21,000

270 x 25 x 3 + 25 x 10 x 9 = 22,500

200 x 25 x 3 + 200 x 10 x 9 = 33,000

100 x 25 x 3 + 450 x 10 x 9 = 48,000

50 x 25 x 3 + 575 x 10 x 9 = 55,500

0 x 25 x 3 + 700 x 10 x 9 = 63,000

Therefore, only baseballs should be produced to maximize results.