Ask Question
8 April, 22:17

Pets Inc. makes 2 products, dog collars and cat collars. Each passes through the cutting machine, which is the binding constraint. Dog collars take 6 minutes on the cutting machine and have a contribution margin per unit of $10. Cat collars take 4 minutes on the cutting machine and have a contribution margin per unit of $8. Assume that there are 2,000 hours available on the cutting machine and that the demand for each product is 15,000 units. How many of each product should be made

+2
Answers (1)
  1. 8 April, 22:36
    0
    Dog Collar 10,000 units

    Cat Collar 15,000 units

    Explanation:

    We have only constraint of 2,000 hours on the cutting machine.

    First we will calculate the Contribution margin per hour

    Contribution margin per hour = Contribution margin per unit / Numbers of hours required per unit

    Dog Collar = $10 / (6/60) hours = 10 / 0.1 = $100 per hour

    Cat Collar = $8 / (4/60) hours = $120 per hour

    Pets Inc. will make Cat collar more than dog

    Hours required for 15,000 unit of Cat Collar = 15000 x 4 / 60 = 1,000 hours

    Hours for Dog Collars = 2,000 - 1000 = 1000 hour

    Unit of Dog Collar = 1000 hours / (6/60) = 10,000 units
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Pets Inc. makes 2 products, dog collars and cat collars. Each passes through the cutting machine, which is the binding constraint. Dog ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers