A Company Produces Three Different Products That All Require Processing

question 97

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:
$\begin{array}{lrrr}&\text { A}&\text { B}&\text { C}\\ \text { Sales price per unit } & \$ 20.00 & \$ 38.00 & \$ 35.00 \\\text { Variable costs per unit } & \$ 12.00 & \$ 26.00 & \$ 17.00 \\\text { Machine hours necessary to produce one } & 2.5 & 4.0 & 4.50\\\text { unit } \end{array}$

Required:
a.Determine the preferred sales mix if there are no market constraints on any of the products.
b.Determine the preferred sales mix if the demand is limited to 5,000 units for each product.
c.Determine the preferred sales mix if the demand is limited to 3,000 units for each product.

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Definitions:

Fraction

A mathematical expression representing a part of a whole or a division of quantities.

Percentage Form

A way to express a number as a fraction of 100.

Royalty

A payment made to the owner of a certain property, right, or patent for the use of that property by others.

Textbook Sales

The activity of selling educational books typically used in schools, colleges, and universities.