A Company Produces Three Different Products That All Require Processing

question 80

Essay

A company produces three different products that all require processing on the same machines. There are only 27,000 machine hours available in each year. Production information for each product is:
$$\begin{array} { | l | r | r | r | } \hline &\underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline{\mathrm{c}}\\ \hline \text { Sales price per unit } & \$ 20.00 & \$ 38.00 & \$ 35.00 \\\hline \text { Variable costsper unit } & \$ 12.00 & \$ 26.00 & \$ 17.00 \\\hline \text { Machine hours necessary to produce one unit } & 2.5 & 4.0 & 4.50 \\\hline\end{array}$$ Required:
(1) Determine the preferred sales mix if there are no market constraints on any of the products.
(2) Determine the preferred sales mix if the demand is limited to 5,000 units for each product.
(3) Determine the preferred sales mix if the demand is limited to 3,000 units for each product.

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Definitions:

Socialism

Socialism is a political and economic theory advocating for collective or governmental ownership and administration of the means of production and distribution of goods.

Private Hands

Ownership or control by private individuals or corporations, as opposed to public or government ownership.

Financial Institutions

Organizations that provide financial services, such as banks, insurance companies, and investment firms.

Socialist Economy

An economic system where the production and distribution of goods and services are regulated by the government, aiming for equal wealth distribution and minimizing economic inequalities.