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:

Cordova currently is limited to 60,000 labor hours per month. Cordova’s marketing department has determined the following demand for its products:

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 A Product B Product C Sales price $ 50.00 $ 60.00 $ 90.00 Variable costs per unit 16.40 11.25 24.40 Fixed costs per unit 6.00 6.00 6.00 Required number of labor hours 2.00 2.50 4.00

Explanation / Answer

Product A Product B Product C Sales price 50 60 90 Variable costs per unit 16.4 11.25 24.4 Contribution margin per unit 33.6 48.75 65.6 Required number of labor hours 2 2.5 4 Contribution margin per labor hour 16.8 19.5 16.4 Preference for production 2 1 3 Total demand 15000 10000 6000 Total labor hours required to satisfy demand 30000 25000 24000 Labor hours allocated 30000 25000 5000 Units to be produced 15000 10000 1250 Product Units produced Product B 10000 Product A 15000 Product C 1250

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