Cordova manufactures three types of stained glass window, cleverly named Product

Question

Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows Product A $49.00 15.80 5.00 2.00 Product B $59.00 11.50 5.00 2.50 Product C Sales price Variable costs per unit Fixed costs per unit Required number of labor hours $89.00 23.80 5.00 4.00 Cordova currently is limited to 60,000 labor hours per month. Cordova's marketing department has determined the following demand for its products Product A Product B Product C 14,000 units 10,000 units 6,000 units Required Given the company's limited resource and expected demand, compute how many units of each product Cordova should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first. Round your answer to the nearest whole number.) Product Units Produced

Explanation / Answer

Product A Product B Product C Sales price $49 $59 $89 Less: variable cost 15.80 11.50 23.80 Contribution margin per unit 33.20 47.50 65.20 Required no. of labor hours 2 2.5 4 Contribution margin per hour $16.60 $19.00 $16.30 Rank II I III Product Units Produced B 10,000 A 14,000 C (60,000 - 25,000 - 28,000) = 7,000 / 4 = 1,750

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