Due to supply shortages of light weight material that is needed to produce its sports bicycles, the management of a German bicycle factory has to make a decision which product to focus on under these special circumstances. The different bicycles consume different amounts of this material. In total, the company has only 8,000 kilograms in stock and new deliveries are not expected to arrive soon. a. Please advise the head of operations, which product he should focus on in order to maximize the profit of the company. b. Can you think of two other factors that he should consider when making this decision? Bicycle model Sales price Total variable cost Kilograms of light weight material required to manufacture 1 unit Fast1 € 800 € 500 1,5 Fast2 € 1,000 € 650 2,5 Prodrive € 1,600 € 1450 3 Superdrive € 2,000 € 1600 4

Due to supply shortages of light weight material that is needed to produce its sports bicycles, the management of a German bicycle factory has to make a decision which product to focus on under these special circumstances. The different bicycles consume different amounts of this material. In total, the company has only 8,000 kilograms in stock and new deliveries are not expected to arrive soon. a. Please advise the head of operations, which product he should focus on in order to maximize the profit of the company. b. Can you think of two other factors that he should consider when making this decision? Bicycle model Sales price Total variable cost Kilograms of light weight material required to manufacture 1 unit Fast1 € 800 € 500 1,5 Fast2 € 1,000 € 650 2,5 Prodrive € 1,600 € 1450 3 Superdrive € 2,000 € 1600 4

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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