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Brik

Price: $2.50


P20-24A Making dropping a product and product-mix decisions [10–15 min]
Brik, located in Port St. Lucie, Florida, produces two lines of electric toothbrushes:
deluxe and standard. Because Brik can sell all the toothbrushes it can produce, the
owners are expanding the plant. They are deciding which product line to emphasize.
To make this decision, they assemble the following data:


      Deluxe Standard
Sale price 88 52
Variable expenses 24 16
Contribution margin 64 36
Contribution margin ratio 72.7% 69.2%

After expansion, the factory will have a production capacity of 4,900 machine hours
per month. The plant can manufacture either 60 standard electric toothbrushes or
28 deluxe electric toothbrushes per machine hour.
Requirements
1. Identify the constraining factor for Brik.
2. Prepare an analysis to show which product line to emphasize.

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