Minaya Corporation Has Two Products, M20 and Y53, That Use

question 69

Essay

Minaya Corporation has two products, M20 and Y53, that use the same constrained resource--a critical raw material. Data concerning those products follow: $\begin{array}{lrr}&\text { M20 } &{\text { Y53 }} \\\text { Selling price. }&\$ 192.00 & \$ 220.00 \\\text { Variable cost }&\$ 153.60 & \$ 176.00 \\\text { Constrained resource required per unit (grams) }&8 & 10 \\\text { Demand (units) }&820 & 760\end{array}$ The total amount of the constrained resource available is 9,900 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?

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Definitions:

Callable Bonds

Bonds that can be redeemed by the issuer prior to their maturity date at a specified call price.

Redeemable

Refers to an item or financial instrument that can be converted into cash or another financial instrument.

Bond Indenture

The contract between a corporation issuing bonds and the bondholders.

Amortization

The process of gradually writing off the initial cost of an intangible asset over a fixed period of time in a manner similar to depreciation of physical assets.