Answer :
The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. what is the incremental profit from producing the product and instead of product b for the year $12,000
The incremental profit from manufacturing product A instead of product B for the year can be calculated as follows:
Details Product A Product B Number of batches that can be produced (A/B) 480 600
Contribution margin per batch $450 $340
Total contribution margin per batch $216,000 $204,000
Highest contribution margin per unit for constrained processes Product. Hmm, Hobson Beach. The product with the largest contribution margin, but with a constraint of 1 unit.
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