Terrazo Ltd. produces three kinds of ceramic tile that are used in home and office construction. Details of each type of tile are as follows:
Terrazo has 30,000 machine hours available for production.
Required:
Assume that Terrazo can sell all of each type of tile that it produces.
a. Determine the amount of each type of tile that Terrazo should produce.

b. Determine Terrazo's contribution margin using your decision in requirement a.

c. Assume that the demand for each type of tile is limited to 20,000 units each. Determine the amount of each type of tile that Terrazo should produce.

d. Determine Terrazo's contribution margin using your decision in requirement b.

Question

Terrazo Ltd. produces three kinds of ceramic tile that are used in home and office construction. Details of each type of tile are as follows:
Terrazo has 30,000 machine hours available for production.
Required:
Assume that Terrazo can sell all of each type of tile that it produces.
  a. Determine the amount of each type of tile that Terrazo should produce.
 
b. Determine Terrazo's contribution margin using your decision in requirement a.
 
c. Assume that the demand for each type of tile is limited to 20,000 units each. Determine the amount of each type of tile that Terrazo should produce.
 
d. Determine Terrazo's contribution margin using your decision in requirement b.

Quizplus · Accepted Answer

The Answer of Terrazo Ltd. produces three kinds of ceramic tile that are used in home and office construction. Details of each type of tile are as follows:
Terrazo has 30,000 machine hours available for production.
Required:
Assume that Terrazo can sell all of each type of tile that it produces.
  a. Determine the amount of each type of tile that Terrazo should produce.
 
b. Determine Terrazo's contribution margin using your decision in requirement a.
 
c. Assume that the demand for each type of tile is limited to 20,000 units each. Determine the amount of each type of tile that Terrazo should produce.
 
d. Determine Terrazo's contribution margin using your decision in requirement b.