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.
