The Constrained Resource at Nealen Corporation Is a Key Raw

question 41

Essay

The constrained resource at Nealen Corporation is a key raw material. A total of 9,800 ounces of the constrained resource are available. Data concerning the company's two products, B08 and O05, follow: $\begin{array}{lrr}&\text { B08 } & {O05} \\\text { Demand (units) }&1,040 & 1,550 \\\text { Selling price }&\$ 102.00 & \$ 124.00 \\\text { Variable cost }&\$ 61.20 & \$ 86.80\end{array}$ Product B08 requires 6 ounces of the constrained resource; product O05 requires 4 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?

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Definitions:

Bloomingdale's

An American luxury department store chain founded in New York City, known for selling designer brands and high-end merchandise.

Community Shopping Center

A retail location that typically has one primary store (usually a department store branch) and often 20 to 40 smaller outlets, serving a population of consumers who are within a 10- to 20-minute drive.

Primary Store

The main retail outlet or location of a business that serves as the centerpiece for brand identity and customer engagement.

Department Store Branch

A subsidiary location of a larger department store company, offering a range of merchandise and services similar to the main store but located in different areas.