Refer to the information in Problem 4-75.

Required

a. A local engineering firm claims it can revise the production process such that product X-2 only requires 1.6 machine hours on the shared machine. How much would Clarke be willing to pay per period for the new process?
b. Suppose, instead, that the local engineering firm can revise the production process such that Product X-3 only requires 3.5 machine hours on the shared machine. (Product X-2 requires 2.5 machine hours as in Problem 4-75. How much would Clarke be willing to pay per period for the new process?

Problem 4-75

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X-1 Х-2 X-3 $ 100 $ Price per unit Variable cost per unit Machine hours per unit Maximum units demand per period 200 $ 400 $ 50 $ 120 $ 240 1.0 2.5 4.0 300,000 150,000 20,000