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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: Sales price Variable cost Firing time Square $ 78 $ 23 2.5 hours Round $ 102 $ 39 3.5 hours Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run. Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot Contribution Margin per Unit Contribution Margin per Hour 2. Which type of pot should Anne produce to maximize her short-term profit? Which type of pot should Anne produce

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: Sales price Variable cost Firing time Square $ 78 $ 23 2.5 hours Round $ 102 $ 39 3.5 hours Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run. Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot Contribution Margin per Unit Contribution Margin per Hour 2. Which type of pot should Anne produce to maximize her short-term profit? Which type of pot should Anne produce

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 1TP: Seda Sarkisian makes wedding cakes from her home. A customer has requested two duplicate wedding...
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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: Sales price Variable cost Firing time Square $ 78 $ 23 2.5 hours Round $ 102 $ 39 3.5 hours Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run. Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot Contribution Margin per Unit Contribution Margin per Hour 2. Which type of pot should Anne produce to maximize her short-term profit? Which type of pot should Anne produce
Transcribed Image Text: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: Sales price Variable cost Firing time Square $ 78 $ 23 2.5 hours Round $ 102 $ 39 3.5 hours Assume Anne can sell as many pots as she can create but is limited as to the number of hours that the kiln can be run. Required: 1. Compute the contribution margin per unit and contribution margin per hour of firing time. Square Ceramic Pot Round Ceramic Pot Contribution Margin per Unit Contribution Margin per Hour 2. Which type of pot should Anne produce to maximize her short-term profit? Which type of pot should Anne produce
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