Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne's creations, onlyone pot can be fired in the kiln at a time.Information about each model follows:Square$70$152.5 hoursRoundSales priceVariable cost$90$203.5 hoursFiring timeSuppose that Anne has developed a rectangular, medium-size ceramic pot. It requires four hours of kiln time; however, two medium-size pots can fit in the kiln at once. The mediursize pots would sell for $60 each and have variable cost of $10 per pot.If Anne has only 40 hours of firing time available per week, what is the maximum amount of contribution margin she can earn per week?Maximum Contribution Margin

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Asked Oct 21, 2019
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how would i find the maximum contribution margin?

Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne's creations, only
one pot can be fired in the kiln at a time.
Information about each model follows:
Square
$70
$15
2.5 hours
Round
Sales price
Variable cost
$90
$20
3.5 hours
Firing time
Suppose that Anne has developed a rectangular, medium-size ceramic pot. It requires four hours of kiln time; however, two medium-size pots can fit in the kiln at once. The mediur
size pots would sell for $60 each and have variable cost of $10 per pot.
If Anne has only 40 hours of firing time available per week, what is the maximum amount of contribution margin she can earn per week?
Maximum Contribution Margin
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Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne's creations, only one pot can be fired in the kiln at a time. Information about each model follows: Square $70 $15 2.5 hours Round Sales price Variable cost $90 $20 3.5 hours Firing time Suppose that Anne has developed a rectangular, medium-size ceramic pot. It requires four hours of kiln time; however, two medium-size pots can fit in the kiln at once. The mediur size pots would sell for $60 each and have variable cost of $10 per pot. If Anne has only 40 hours of firing time available per week, what is the maximum amount of contribution margin she can earn per week? Maximum Contribution Margin

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Expert Answer

Step 1

Contribution Margin:

Contribution Margin is the amount by which sales revenue exceeds variable cost. It is the net amount that sales ‘contribute’ towards periodic fixed costs and profit. It is expressed either as total contribution margin, Contribution margin per unit or contribution margin ratio.

Step 2

Following is the calculation of maximum amount...

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