Going back to Activity…7.19, what is the maximum price that the business concerned would logically be prepared to pay to have the remaining B14s machined by a subcontractor, assuming that no fixed or variable cost would be saved as a result of not doing the machining in-house?

Would there be a different maximum if we were considering the B22s?

Data from Activity 7.19

A business makes three different products, the details of which are as follows:

Fixed cost is not affected by the choice of product because all three products use the same machine. Machine time is limited to 148 hours a week.

Which combination of products should be manufactured if the business is to produce the highest profit?

Transcribed Image Text:

Product (code name) Selling price per unit (£) Variable cost per unit (£) Weekly demand (units) Machine time per unit (hours) B14 B17 25 20 10 25 4 8 20 3 B22 23 12 30 4