Bear Mountain Sporting Goods has two product lines: Sporting Goods and Hunting Gear. Bear Mountain incurs $2,660,000 in fixed costs. The unit contribution margin for Sporting Goods is $300 with an average production time per product of 3 hours, while for Hunting Gear it is $500 with an average production time per product of 6 hours. If there are no production constraints, and Bear Mountain Sporting Goods wishes to maximize its operating income, on which product line should the business focus production efforts?

Question

Quizplus · Accepted Answer

The Answer of Bear Mountain Sporting Goods has two product lines: Sporting Goods and Hunting Gear. Bear Mountain incurs $2,660,000 in fixed costs. The unit contribution margin for Sporting Goods is $300 with an average production time per product of 3 hours, while for Hunting Gear it is $500 with an average production time per product of 6 hours. If there are no production constraints, and Bear Mountain Sporting Goods wishes to maximize its operating income, on which product line should the business focus production efforts?

Bear Mountain Sporting Goods Has Two Product Lines: Sporting Goods