Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available: Iced Tea Soda Lemonade Sales price per unit $0.90 $0.60 $0.50 Variable cost per unit 0.30 0.15 0.10 Contribution margin per unit $0.60 $0.45 $0.40 Sensational is experiencing a bottleneck in one of its processes that affects each product as follows: Iced Tea Soda Lemonade Bottleneck process hours per unit 3 3 4 (a) Using a theory of constraints (TOC) approach, rank the products in terms of profitability. (b) What price for lemonade would equate its profitability (contribution margin per bottleneck hour) to that of soda
Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available: Iced Tea Soda Lemonade Sales price per unit $0.90 $0.60 $0.50 Variable cost per unit 0.30 0.15 0.10 Contribution margin per unit $0.60 $0.45 $0.40 Sensational is experiencing a bottleneck in one of its processes that affects each product as follows: Iced Tea Soda Lemonade Bottleneck process hours per unit 3 3 4 (a) Using a theory of constraints (TOC) approach, rank the products in terms of profitability. (b) What price for lemonade would equate its profitability (contribution margin per bottleneck hour) to that of soda
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available: Iced Tea Soda Lemonade Sales price per unit $0.90 $0.60 $0.50 Variable cost per unit 0.30 0.15 0.10 Contribution margin per unit $0.60 $0.45 $0.40 Sensational is experiencing a bottleneck in one of its processes that affects each product as follows: Iced Tea Soda Lemonade Bottleneck process hours per unit 3 3 4 (a) Using a theory of constraints (TOC) approach, rank the products in terms of profitability. (b) What price for lemonade would equate its profitability (contribution margin per bottleneck hour) to that of soda
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