Mini Cookin' is a company that builds and sells play kitchens. In the past, the company was simply a parts supplier for other toy companies. Recently, however, they have been attempting to break into the market with their own personal brand as well, but to ensure a steady revenue stream, Mini Cookin' is still producing a particular part to sell to other companies.
After expanding their production operations, Mini Cookin' has seen great success in sales. However, they are currently producing at 80% capacity (of total floor space occupied), and are unsure whether to devote that extra capacity to producing more of their own play kitchens or to simply increase the number of parts they supply to other companies. Following is information regarding the two options:
Mini Cookin's factory has a total of 20,000 square feet of floor space.
Which option would return the highest contribution margin per month, and how much would it be?

Question

Mini Cookin' is a company that builds and sells play kitchens. In the past, the company was simply a parts supplier for other toy companies. Recently, however, they have been attempting to break into the market with their own personal brand as well, but to ensure a steady revenue stream, Mini Cookin' is still producing a particular part to sell to other companies. 
After expanding their production operations, Mini Cookin' has seen great success in sales. However, they are currently producing at 80% capacity (of total floor space occupied), and are unsure whether to devote that extra capacity to producing more of their own play kitchens or to simply increase the number of parts they supply to other companies. Following is information regarding the two options:
  Mini Cookin's factory has a total of 20,000 square feet of floor space.
Which option would return the highest contribution margin per month, and how much would it be?

Quizplus · Accepted Answer

The Answer of Mini Cookin' is a company that builds and sells play kitchens. In the past, the company was simply a parts supplier for other toy companies. Recently, however, they have been attempting to break into the market with their own personal brand as well, but to ensure a steady revenue stream, Mini Cookin' is still producing a particular part to sell to other companies. 
After expanding their production operations, Mini Cookin' has seen great success in sales. However, they are currently producing at 80% capacity (of total floor space occupied), and are unsure whether to devote that extra capacity to producing more of their own play kitchens or to simply increase the number of parts they supply to other companies. Following is information regarding the two options:
  Mini Cookin's factory has a total of 20,000 square feet of floor space.
Which option would return the highest contribution margin per month, and how much would it be?

Mini Cookin' Is a Company That Builds and Sells Play