Auden Makes Three Types of Vitamin Supplements,all of Which Require

question 48

Essay

Auden makes three types of vitamin supplements,all of which require the use of encapsulating machines that have a capacity of 10,000 hours.Information on the three types (per case)is as follows:
$$\begin{array} { l r r r } & \text { Basic } & \text { Vita-Stress } & \text { Antioxidant+ } \\\text { Selling price } & \$ 100 & \$ 125 & \$ 160 \\\text { Variable cost } & 50 & 70 & 90 \\\text { Machine hours } & 0.4 & 0.50 & 0.8\end{array}$$ A. What is the contribution margin per case for each type?
B. What is the contribution margin per hour of machine time for each type?
C. Based on your analysis in requirement B, if the company can sell all that it can make of all of the products, how many of each type should be sold to maximize total contribution margin?

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Definitions:

Equal Annual Cash Flows

A series of identical cash amounts that occur at equal intervals over a period of time, commonly used in financial analysis.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.

Withdraw

To remove something from consideration or usage, or to take money out of a bank account.

Invest Enough Money

The process of allocating adequate financial resources to opportunities, projects, or assets to achieve desired outcomes or returns.