Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available:? $$\begin{array} { l r r r }
& \text { Iced Tea } & \text { Soda } & \text { Lemonade } \
\text { Sales price per unit } & \$ 0.90 & \$ 0.60 & \$ 0.50 \
\text { Variable cost per unit } & 0.30 & 0.15 & 0.10 \
\text { Contribution margin per unit } & \underline { \$ 0.60 } & \mathbf { \$ 0 . 4 5 } & \mathbf { \$ 0 . 4 0 }
\end{array}$$ Sensational is experiencing a bottleneck in one of its processes that affects each product as follows:

(a)Using a theory of constraints (TOC) approach, rank the products in terms of profitability.
(b)What price for lemonade would equate its profitability (contribution margin per bottleneck hour) to that of soda?

Question

Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available:? $$\begin{array} { l r r r } 
& \text { Iced Tea } & \text { Soda } & \text { Lemonade } \
\text { Sales price per unit } & \$ 0.90 & \$ 0.60 & \$ 0.50 \
\text { Variable cost per unit } & 0.30 & 0.15 & 0.10 \
\text { Contribution margin per unit } & \underline { \$ 0.60 } & \mathbf { \$ 0 . 4 5 } & \mathbf { \$ 0 . 4 0 }
\end{array}$$  Sensational is experiencing a bottleneck in one of its processes that affects each product as follows:

(a)Using a theory of constraints  (TOC) approach, rank the products in terms of profitability.
(b)What price for lemonade would equate its profitability  (contribution margin per bottleneck hour) to that of soda?

Quizplus · Accepted Answer

The Answer of Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available:? $$\begin{array} { l r r r } 
& \text { Iced Tea } & \text { Soda } & \text { Lemonade } \
\text { Sales price per unit } & \$ 0.90 & \$ 0.60 & \$ 0.50 \
\text { Variable cost per unit } & 0.30 & 0.15 & 0.10 \
\text { Contribution margin per unit } & \underline { \$ 0.60 } & \mathbf { \$ 0 . 4 5 } & \mathbf { \$ 0 . 4 0 }
\end{array}$$  Sensational is experiencing a bottleneck in one of its processes that affects each product as follows:

(a)Using a theory of constraints  (TOC) approach, rank the products in terms of profitability.
(b)What price for lemonade would equate its profitability  (contribution margin per bottleneck hour) to that of soda?

Sensational Soft Drinks Makes Three Products: Iced Tea, Soda, and Lemonade