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Keppel Corporation 270

Price: $1.99


Keppel Corporation manufactures and sells three different models of exterior
doors. Although the doors vary in terms of quality and features, all are good sellers. Keppel
is currently operating at full capacity with limited machine time.
Sales and production information relevant to each model is shown below.

  Economy Standard Deluxe
Selling price  $270 $450 $650
Variable costs and expenses  $144 $260 $430
Machine hours required  0.6 0.8 1.1

Instructions
(a) Ignoring the machine time constraint, which single product should Keppel produce?
(b) What is the contribution margin per unit of limited resource for each product?
(c) If additional machine time could be obtained, how should the additional time be
used?

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