Question

Question 15 Coronado's Coffee can sell all the units it can produce of either latte or cappuccino but not both. Latte has a unit contribution margin of $45 and takes three machine hours to make and cappuccino has a unit contribution margin of $38 and takes two machine hours to make. There are 1400 machine hours available to manufacture a product. What should Coronado's do? O Make latte which creates $7 more profit per unit than cappuccino does. O Make cappuccino which creates $4 more profit per constraint than latte does. O Make cappuccino because more units can be made and sold than latte. O The same total profits exists regardless of which product is made.

Answer 1

				latte	cappuccino
	Contribution per unit			45	38
	machine hrs per unit			3	2
	contribution per hr			15	19
	Ranking			2	1
	contribution per hr of Cappuccino is 19 -15 = $4 per hr more than latte
	answer
	Make Cappuccino which creates $4 more profit per constraint than latte
	does