1. Castle Corp. produces three products, and is currently facing a labor shortage. The selling price, costs, and labor requirements of the three products are as follows:

Product A Product B Product C

Selling price $ 55.00 $ 32.00 $ 44.00

Variable cost per unit $ 43.00 $ 23.00 $ 38.00

Direct labor hours per unit 1.5 3 2

Castle has unlimited demand for all its products. Which product/s should Castle Corp produce to maximize profit during the labor shortage?

2. Elmwood, Inc. currently sells 13,200 units of its product per year for $112 each. Variable costs total $87 per unit. Elmwoods manager believes that if a new machine is leased for $240,900 per year, modifications can be made to the product that will increase its retail value. These modifications will increase variable costs by $14.00 per unit, but Elmwood is hoping to sell the modified units for $142 each. a-1. Should Elmwood modify the units or sell them as is? multiple choice

O Sell as is

O Sell with modifications

a-2. How much will the decision affect profit?

amount: b. What is the least Elmwood could charge for the modified units to make it worthwhile to modify them? (Round your answer to 2 decimal places.)

minimum selling price: c. The leasing company is willing to negotiate the price of the machine lease. What is the most Elmwood would be willing to pay to lease the machine if they plan to charge $142 for the modified units?

maximum amount: