Sammamish Brick, Inc., manufactures bricks using clay deposits on the companys property. Raw clays are...
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Sammamish Brick, Inc., manufactures bricks using clay deposits on the companys property. Raw clays are blended and then extruded into molds to form unfired bricks. The unfired bricks are then stacked onto movable metal platforms and rolled into the kiln where they are fired until dry. The dried bricks are then packaged and shipped to retail outlets and contractors. The bottleneck in the production process is the kiln, which is available for 3,125 hours per year. Data concerning the companys four main products appear below. Products are sold by the pallet.
Traditional Brick
Textured Facing
Cinder Block
Roman Brick
Gross revenue per pallet
$ 833
$ 1,396
$ 658
$ 956
Contribution margin per pallet
$ 520
$ 650
$ 420
$ 490
Annual demand (pallets)
115
135
125
175
Hours required in the kiln per pallet
10
10
4
5
No fixed costs could be avoided by modifying how much is produced of any product.
Required:
1a.
Calculate the total hours required in the kiln to satisfy demand for all products.
Traditional
Textured
Cinder
Roman
Total
Brick
Facing
Block
Brick
Total hours required in the drying kiln
0
2a.
Calculate the profitability index for the company's four products.
Traditional
Textured
Cinder
Roman
Brick
Facing
Block
Brick
2b.
What is the production plan for the year that would maximize the companys profit? (Round answer to the nearest complete pallet (i.e., 12.3 pallets should be entered as 12.)
pallets
pallets
pallets
pallets
3.
What would be the total contribution margin for the production plan you have proposed?
Traditional
Textured
Cinder
Roman
Brick
Facing
Block
Brick
Total
$0
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