Mike’s Magical Mysteries sells two types of Magical Mysteries, Mega Mysteries an
ID: 2424053 • Letter: M
Question
Mike’s Magical Mysteries sells two types of Magical Mysteries, Mega Mysteries and Menial Mysteries. Mega Mysteries sell for $20 each, and Menial Mysteries sell for $5 each. The cost information for the Magical Mysteries is as follows:
Mega
Menial
Mystery dust
3 pounds
8 pounds
Mystery powder
0.5 pounds
1 pound
Mystery flakes
4 pounds
2 pounds
Secret solution
1 gallon
3 gallons
The costs of inputs are as follows:
$
Per unit
Mystery dust
$0.10
pound
Mystery powder
0.50
pound
Mystery flakes
0.25
pound
Secret solution
0.1
gallon
Assume all costs are variable.
What is the contribution margin of Mega Mysteries?
What is the contribution margin of Mega Mysteries?
If gallons of secret solution are rare and that is our constrained resource, which product should be produced assuming unlimited demand, and why?
If pounds of mystery flakes are rare and that is our constrained resource, which product should be produced assuming unlimited demand, and why?
Mega
Menial
Mystery dust
3 pounds
8 pounds
Mystery powder
0.5 pounds
1 pound
Mystery flakes
4 pounds
2 pounds
Secret solution
1 gallon
3 gallons
Explanation / Answer
Mike’s Magical Mysteries Mega Menial Mystery dust 3 pounds 8 pounds Mystery powder 0.5 pounds 1 pound Mystery flakes 4 pounds 2 pounds Secret solution 1 gallon 3 gallons The costs of inputs are as follows: $ Per unit Mystery dust $0.10 pound Mystery powder 0.5 pound Mystery flakes 0.25 pound Secret solution 0.1 gallon Mega Mysteries Menial Mysteries Selling Price $20 $5 Variable Cost Mystery Dust $ 0.30 $ 0.80 Mystery Powder $ 0.25 $ 0.50 Mystery Flakes $ 1.00 $ 0.50 Secret Solution $ 0.10 $ 1.50 Total Variable Cost $ 1.65 $ 3.30 contribution Margin $ 18.35 $ 1.70 1) If Secret solution are rare Merga Mysteries should be produced because its required only 1 gallon and Menial Mysteries required 3 gallon. 2) If Mystery Flakes are rare Menial Mysteris should be produced because it required only 2 pounds but Mega Mysteries Required 4 Pounds.