Kleppe Corporation has two products that use the same constrained resource-a critical raw material. The total amount of the constrained resource available is 10,000 grams.
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?
d. The company is considering launching a new product whose variable cost is $106 and that requires 7 grams of the constrained resource. What is the minimum selling price for the new product?

Question

Kleppe Corporation has two products that use the same constrained resource-a critical raw material.  The total amount of the constrained resource available is 10,000 grams.
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?
d. The company is considering launching a new product whose variable cost is $106 and that requires 7 grams of the constrained resource. What is the minimum selling price for the new product?

Quizplus · Accepted Answer

The Answer of Kleppe Corporation has two products that use the same constrained resource-a critical raw material.  The total amount of the constrained resource available is 10,000 grams.
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?
d. The company is considering launching a new product whose variable cost is $106 and that requires 7 grams of the constrained resource. What is the minimum selling price for the new product?

Kleppe Corporation Has Two Products That Use the Same Constrained