A paint manufacturing company produces three paint bases of differing quality. Due to throughput limitations (measured in gallons) at their facility, they are unable to meet total demand for their products. In determining which of their products they should produce, what should they consider?
a. The gross profit per unit for each product
b. The operating margin per unit for each product
c. The contribution margin per gallon of throughput for each product
d. None of the above

Answers

Answer 1

Answer:

c. The contribution margin per gallon of throughput for each product

Explanation:

contribution margin per gallon = Revenue per gallon - variable cost per gallon.

Contribution margin would enable the company to know the amount each product earns in excess after variable cost has been subtracted from revenue.

the product with the highest contribution margin should be considered.

Related Questions

Answers

≤

Explanation:

Drive through Full Service

Annual revenue 200,000 500,000

Cost 100,000 150,000

Income 100,000 350,000

Employee 5 15

Income / employee 20,000 23,333.33

Using simultaneous equation ,

Let X represent the drive through service ,and Y represent the full service restaurant

Budget = 100,000x + 150,000y ≤ 2,400,000 (equation 1)

Employer = 5x + 15y ≤ 210 (equation 2)

(Divide equation 1 by 10 ,000)

10x+ 15y ≤ 240 (equation 3)

Using elimination method, multiply equation 2 by -2

10x +15y ≤240

-10x - 30y ≤-420

-15y ≤ -180

y≤ -180/-15

y = 12

substitute y = 12 in equation 3

10x + 15y≤240

10x +180 ≤240

10x≤240-180

10x≤60

x≤6

12 1,800,000 180

6 600,000 30

6 drive through services and 12 full services should be opened.

6 Drive through 12 full service 20

Cost 600,000 1,800,000 2,400,000

Employees 30 180

Net income 600,000 4,200,000

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