Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne's creations, only one pot can be fired in the kiln at a time. Information about each model follows: Round $ 130 Sales price Variable cost Firing time $ 46 3.5 hours Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run. Square $ 98 $ 28 Contribution Margin per Unit Contribution Margin per Hour 2.5 hours Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot 2. Which type of pot should Anne produce to maximize her short-term profit? Which type of pot should Anne produce

Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne's creations, only one pot can be fired in the kiln at a time. Information about each model follows: Round $ 130 Sales price Variable cost Firing time $ 46 3.5 hours Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run. Square $ 98 $ 28 Contribution Margin per Unit Contribution Margin per Hour 2.5 hours Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot 2. Which type of pot should Anne produce to maximize her short-term profit? Which type of pot should Anne produce

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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