1) Calculate total contribution margin for both scenarios (ie. chairs and tables
ID: 2329785 • Letter: 1
Question
1) Calculate total contribution margin for both scenarios (ie. chairs and tables) in the table below: making the tables first? or making the chairs first, up to total demand.
2) Calculate/Prove out which scenario (ie. chairs? or tables?) is more proftable.
Note: Using excel, Show all calculations on CM per unit of the constrained resource, show all formulas used, and show all cell references.
Constrained Resource Problem Chairs Tables Selling price per unit $80 $400 Variable cost per unit $30 $200 Board feet per unit 2 10 Monthly demand 600 100 Board feet available per month = 2000Explanation / Answer
Making The Chairs First ( 600 units of Charis and 80 units of Tables)
Total contribution = 46,000
Making The Tables First (tables 100 and 500 chairs)
Total contribution = 45,000
In the first scenario i.e. charis first is more profitable as its total congtribution is more as compared to another scenario.
Chairs Tables Sales 48,000 32,000 Less : Variable Cost18,000 16,000 Toal Contribution 30,000 16,000
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