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Table 7.7 A Company Makes Four Products That Have the Following Characteristics

question 147

Multiple Choice

Table 7.7
A company makes four products that have the following characteristics: Product A sells for $75 but needs $20 of materials and $20 of labor to produce;Product B sells for $90 but needs $45 of materials and $20 of labor to produce;Product C sells for $110 but needs $50 of materials and $30 of labor to produce;Product D sells for $135 but needs $75 of materials and $40 of labor to produce.The processing requirements for each product on each of the four machines are shown in the table. Work centers W,X,Y,and Z are available for 40 hours per week and have no setup time when switching between products.Market demand is 50 As,60 Bs,70 Cs,and 80 Ds per week.In the questions that follow,the traditional method refers to maximizing the contribution margin per unit for each product,and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product.
-Use the information in Table 7.7.Using the traditional method,what is the profit if the company manufactures the optimal product mix (consider variable costs only-overhead is not included in this profit calculation) ?

Definitions:

Launch Cost

The total expenses associated with the introduction of a new product or service to the market, including research, marketing, and any initial operational costs.

GEO

refers to Geographical Information Systems (GIS), which are systems that capture, store, manipulate, analyze, manage, and present spatial or geographic data.

LEO

Low Earth Orbit, denoting satellites that orbit the Earth at altitudes between 160 to 2,000 kilometers.

MEO

Medium Earth Orbit, referring to satellites that orbit the earth at altitudes of 2,000 to 35,786 kilometers, used for communications and navigation.