The Constraint at Mirsch Inc Each Unit of Product B01 Requires 9 Ounces of the a Total

question 64

Essay

The constraint at Mirsch Inc. is a key raw material. A total of 9,600 ounces of this constrained resource are available. Data concerning the company's two products, B01 and P46, appear below: $\begin{array}{rr}&B 01 & \mathrm{P} 46 \\\text { Demand (units) }&660 & 570 \\\text { Selling price }&\$ 261.00 & \$ 276.00 \\\text { Variable cost }&\$ 234.90 & \$ 248.40\end{array}$ Each unit of product B01 requires 9 ounces of the constrained raw material; each unit of product P46 requires 12 ounces.
Required:
a. In the present circumstances, which product is most profitable?
b. How much of each product should be produced?
c. The company is considering launching a new product whose variable cost is $210 and that requires 9 ounces of the constrained resource. What is the minimum acceptable selling price for the new product?

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Definitions:

Lice

Parasitic insects that infest the hair and skin of humans and animals, causing itching and discomfort.

Direct Transfer

A method of electronically moving funds from one account to another without the need for paper checks or cash handling.

Indirect Contact

The spread of disease through touching surfaces or objects contaminated by an infected person, instead of direct physical contact.

Pinworms

Small, parasitic worms that infect the intestines, especially in children, causing itching and discomfort around the anus.