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Calculate the contribution margin per machine hour for Napkins and Tissues Based on your answer in (1), determine the units of each product that should be produced in order to maximize profits

1. Calculate the contribution margin per machine hour for Napkins and Tissues.
2. Based on your answer in (1), determine the units of each product that should be produced in order to maximize profits.
3. Because of market conditions, the company can sell no more than 150,000 packages of napkins and 300,000 boxes of facial tissues. Using your answer in (1) and the total available machine hour, determine the packages of napkins and boxes of facial tissues to be produced.
4. Using your answer in (3), calculate the firm’s overall profit.

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Paper Products, Inc., produces table napkins and facial tissues. The manufacturing process is highly mechanized; both products are produced by the same machinery by using different settings. For the coming period, 200,000 machine hours are available. Management is trying to decide on the quantities of each product to produce. The following data are available (for napkins, one unit is one package of napkins; for facial tissues, one unit is one box of tissues): Napkins  Tissues Machine hours per unit 1.00 0.50 Unit selling price $2.50 $3.00 Unit variable cost $1.50 $2.25 Unit fixed cost $0.50 $0.25  REQUIRED 1. Calculate the contribution margin per machine hour for Napkins and Tissues. 2. Based on your answer in (1), determine the units of each product that should be produced in order to maximize profits. 3. Because of market conditions, the company can sell no more than 150,000 packages of napkins and 300,000 boxes of facial tissues. Using your answer in (1) and the total available machine hour, determine the packages of napkins and boxes of facial tissues to be produced. 4. Using your answer in (3), calculate the firm’s overall profit.

Jun 25 2020 View more View Less

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