Pets Inc. makes 2 products, dog collars and cat collars. Each passes through the cutting machine, which is the binding constraint. Dog collars take 6 minutes on the cutting machine and have a contribution margin per unit of $10. Cat collars take 4 minutes on the cutting machine and have a contribution margin per unit of $8. Assume that there are 2,000 hours available on the cutting machine and that the demand for each product is 15,000 units. How many of each product should be made

Dog Collar 10,000 units

Cat Collar 15,000 units

Explanation:

We have only constraint of 2,000 hours on the cutting machine.

First we will calculate the Contribution margin per hour

Contribution margin per hour = Contribution margin per unit / Numbers of hours required per unit

Dog Collar = $10 / (6/60) hours = 10 / 0.1 = $100 per hour

Cat Collar = $8 / (4/60) hours = $120 per hour

Pets Inc. will make Cat collar more than dog

Hours required for 15,000 unit of Cat Collar = 15000 x 4 / 60 = 1,000 hours

Hours for Dog Collars = 2,000 - 1000 = 1000 hour

Unit of Dog Collar = 1000 hours / (6/60) = 10,000 units