Sammamish Brick, Inc., manufactures bricks using clay deposits on the companys property. Raw clays are...
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Accounting
Sammamish Brick, Inc., manufactures bricks using clay deposits on the companys property. Raw clays are blended and then extruded into molds to form unfired bricks. The unfired bricks are then stacked onto movable metal platforms and rolled into the kiln where they are fired until dry. The dried bricks are then packaged and shipped to retail outlets and contractors. The bottleneck in the production process is the kiln, which is available for 3,125 hours per year. Data concerning the companys four main products appear below. Products are sold by the pallet. |
Traditional Brick | Textured Facing | Cinder Block | Roman Brick | |
Gross revenue per pallet | $ 833 | $ 1,396 | $ 658 | $ 956 |
Contribution margin per pallet | $ 520 | $ 650 | $ 420 | $ 490 |
Annual demand (pallets) | 115 | 135 | 125 | 175 |
Hours required in the kiln per pallet | 10 | 10 | 4 | 5 |
No fixed costs could be avoided by modifying how much is produced of any product. |
Required: | |
1a. | Calculate the total hours required in the kiln to satisfy demand for all products. |
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2a. | Calculate the profitability index for the company's four products. | ||||||||||||||||||||||||||||
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2b. | What is the production plan for the year that would maximize the companys profit? (Round answer to the nearest complete pallet (i.e., 12.3 pallets should be entered as 12.) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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