1. Petco makes 2 products, dog collars and cat collars. Each passes through the

Question

1. Petco makes 2 products, dog collars and cat collars. Each passes through the cutting machine, which is the binding constraint. Dog collars take 6 minutes on the cutting machine and have a contribution margin per unit of $10. Cat collars take 4 minutes on the cutting machine and have a contribution margin per unit of $8.
Assume that there are 2,000 hours available on the cutting machine and that the demand for each product is 15,000 units. How many of each product should be made? (Points : 2)
15,000 dog collars; 15,000 cat collars.
10,000 dog collars; 15,000 cat collars.
15,000 dog collars; 7,500 cat collars.
30,000 cat collars.

Explanation / Answer

For dog collars: contribution margin per machine minute is 10/6 = $1.67 per minute. For cat collars: contribution marign per machine minute is 8/4 = $2.00 per minute. You should make the cat collars first but only up to the demand of 15,000. This would take: 15,000 collar*4 minutes per collar = 60,000 minutes, divide by 60 to get 1000 hours. Then there are 1000 hours left for dog collars or 60,000 minutes. 60,000 minutes * 1 collar/6 minutes = 10,000 collars. So the answer is 10,000 dog collars and 15,000 cat collars.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.