A company produces two products, Gamma and Omega. Gamma sells for ($ 10) per unit and Omega
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A company produces two products, Gamma and Omega. Gamma sells for \(\$ 10\) per unit and Omega sells for \(\$ 12.50\) per unit. Variable costs are \(\$ 7\) per unit for Gamma and \(\$ 8\) per unit for Omega. The company has a capacity of 5,000 machine hours per month. Gamma uses 1 machine hour per unit and Omega uses 3 machine hours per unit.
1. Compute the contribution margin per machine hour for each product.
2. Demand for Gamma is limited to 3,800 units per month. How many units of Gamma and Omega should the company produce, and what is the total contribution margin from this sales mix?
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Gauri Hendre
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