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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: Sales price Variable cost Firing time Round $ 148 $50 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. Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Contribution Margin per Unit Contribution Margin per Hour Square $ 100 $ 25 2.5 hours Square Ceramic Pot Round Ceramic Pot 2. Which type of pot should Anne produce to maximize her short-term profit?

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: Sales price Variable cost Firing time Round $ 148 $50 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. Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Contribution Margin per Unit Contribution Margin per Hour Square $ 100 $ 25 2.5 hours Square Ceramic Pot Round Ceramic Pot 2. Which type of pot should Anne produce to maximize her short-term profit?

FINANCIAL ACCOUNTING
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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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: Square $ 100 $ 25 Sales price Variable cost Firing time Round $ 148 $50 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. Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Contribution Margin per Unit Contribution Margin per Hour 2.5 hours Square Ceramic Pot Round Ceramic Pot 2. Which type of pot should Anne produce to maximize her short-term profit?
Transcribed Image Text: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: Square $ 100 $ 25 Sales price Variable cost Firing time Round $ 148 $50 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. Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Contribution Margin per Unit Contribution Margin per Hour 2.5 hours Square Ceramic Pot Round Ceramic Pot 2. Which type of pot should Anne produce to maximize her short-term profit?
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