California Products Company has the capability of producing and selling three products. Each product has an annual demand potential (at current pricing and promotion levels), a variable contribution, and an annual fixed cost. The fixed cost can be avoided if the product is not produced at all. This information is summarized below:

Each product requires work on three machines. The standard productivities and capacities are below:

a. Determine which products should be produced, and how much of each should be produced, in order to maximize profit contribution from these operations. 

b. Suppose the demand potential for product K were doubled. What would be the maximum profit contribution?

Transcribed Image Text:

Product | J K Demand 290,000 200,000 50,000 Contribution $1.20 1.80 2.30 Fixed Cost $60,000 200,000 55,000