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opfaluyi opfaluyi
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4 months ago
Sky Mountain Bakery makes doughnuts, cupcakes, and scones that are in high demand by local restaurants and hotels. Following is information for each of these products:

​​DoughnutsCupcakesScones
Selling price per item$1.60$2.20$2.25
Variable cost per item 1.00 1.50 0.95
Contribution margin per item$0.60$0.70$1.30
Machine hours per item0.10.140.2

Sky Mountain has 2,000 machine hours available each month. Demand for each item exceeds Sky Mountain's capacity to produce the item. In order to maximize the company's total contribution margin, in what sequence should Sky Mountain fill orders for the three products?

▸ Scones first, then doughnuts, then cupcakes

▸ Cupcakes first, then doughnuts, then scones

▸ Scones first, then cupcakes, then doughnuts

▸ Doughnuts first, then scones, then cupcakes
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Managerial Accounting

Managerial Accounting


Edition: 4th
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stanka82stanka82
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More solutions for this book are available here
Scones first, then doughnuts, then cupcakes

Doughnuts = $0.60 ÷ 0.1 = $6 per machine hour;
Cupcakes = $0.70 ÷ 0.14 = $5; Scones = $1.30 ÷ 0.2 = $6.50;
Produce as: 1) Scones; 2) Doughnuts, 3) Cupcakes
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