Giant Inc Has 3,600 Machine Hours Available Each Month Required:
A

question 51

Essay

Giant Inc has 3,600 machine hours available each month.The following information on the company's three surgical kits is available:
$$\begin{array} { | l | r | r | r | } \hline & \begin{array} { r } \text { Surgical } \\\text { Kit 1 }\end{array} & \begin{array} { r } \text { Surgica } \\\text { Kit 2 }\end{array} & \begin{array} { r } \text { Surgical } \\\text { Kit 3 }\end{array} \\\hline \text { Contribution margin per unit } & \$ 5.00 & \$ 4.00 & \$ 2.50 \\\hline \text { Machine hours per unit } & 2 & 1 & 3 \\\hline \text { Sales demand in units } & 1,000 & 800 & 900 \\\hline\end{array}$$

Required:
a.What production schedule will maximize the company's profits?
b.What will be the maximum possible contribution margin?

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Definitions:

Zero Net Difference

When the difference between expense and revenue equals zero; meaning that the values of both are equal; also called breakeven points when revenue and expenses are graphed on the same coordinate plane.

Demand Function

A mathematical formula that describes the relationship between the demand for a good and its price, along with other factors like income and prices of related goods.

Expense Functions

Mathematical expressions that calculate the total costs associated with producing a certain number of goods or services.

Revenue Functions

Mathematical models that describe how a company's revenue is related to the selling price of its products and the quantity of products sold.