The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. what is the incremental profit from producing product a instead of product b for the year?

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Rich1952 Rich1952

25-08-2022
Business

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The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. what is the incremental profit from producing product a instead of product b for the year?

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rafikiedu01 rafikiedu01 · Answer 1 · 2022-08-31T16:46:23+02:00

The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. what is the incremental profit from producing the product and instead of product b for the year $12,000

The incremental profit from manufacturing product A instead of product B for the year can be calculated as follows:

Details Product A Product B Number of batches that can be produced (A/B) 480 600

Contribution margin per batch $450 $340

Total contribution margin per batch $216,000 $204,000

Highest contribution margin per unit for constrained processes Product. Hmm, Hobson Beach. The product with the largest contribution margin, but with a constraint of 1 unit.

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