The Constrained Resource at Calabria Corporation Is a Key Raw

question 23

Essay

The constrained resource at Calabria Corporation is a key raw material. A total of 9,900 ounces of the constrained resource are available. Data concerning the company's two products follow: Product S28 requires 2 ounces of the constrained resource; product M16 requires 13 ounces.
Required:
a. Which product is most profitable, given the company's constraint?
b. How much of each product should be produced?
c. What is the total contribution margin if your plan in part (b) above is followed?

---

Definitions:

Diseconomies of Scale

Diseconomies of scale occur when a company or business grows so large that the costs per unit increase, opposite of economies of scale where costs decrease with increasing production.

Economic Growth

A rise in the output of goods and services within an economy over a specific time frame.

Employment Discrimination

The unfair or prejudicial treatment of individuals in the workplace based on race, gender, age, religion, nationality, or other non-merit factors.

Innovation

The act of converting a concept or innovation into a product or service that generates value or is something customers are willing to purchase.