Tansley Corporation Has Two Products That Use the Same Constrained

question 55

Essay

Tansley Corporation has two products that use the same constrained resource--a critical raw material. $\begin{array}{lrr}&\text { B99 } & \text { V94 } \\\text { Selling price }&\$ 322.00 & \$ 152.00 \\\text { Variable cost }&\$ 257.60 & \$ 106.40 \\\text { Constrained resource required per unit (grams) }&14 & 8 \\\text { Demand (units) }&460 & 890\end{array}$ The total amount of the constrained resource available is 9,500 grams.
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?
d. The company is considering launching a new product whose variable cost is $167 and that requires 16 grams of the constrained resource. What is the minimum selling price for the new product?

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