FRANCORP sells two products. Products M N Selling price per unit $80 $60 Less variable expenses per unit $46 $40 Contribution margin per unit $34 $20 Current demand per week (units) 2,100 2,400 Processing time required on machine XYZ per unit 2 min. 1 min. Machine XYZ is a constrained resource and is being used at 100% capacity. Machine XYZ has a capacity of 3,000 minutes per week. Which product should FRANCORP focus on?
FRANCORP sells two products.
Products
M N
Selling price per unit $80 $60
Less variable expenses per unit $46 $40
Contribution margin per unit $34 $20
Current demand per week (units) 2,100 2,400
Processing time required on machine XYZ per unit 2 min. 1 min.
- Machine XYZ is a constrained resource and is being used at 100% capacity.
- Machine XYZ has a capacity of 3,000 minutes per week.
Which product should FRANCORP focus on?
a. Product N since it provides a contribution margin net benefit of $3 per minute
b. Product N since it provides a contribution margin net benefit of $3.50 per minute
c. Product M since it provides a contribution margin net benefit of $2.20 per minute
d. Product M since it provides less contribution margin per minute
Step by step
Solved in 2 steps
