1. Ohio Chemical manufacturers a variety of household products. Because of a recent shortage of mytron a key ingredient needed for two of its products Ohio trying to decide how much of it. Information related to the two products that use mytron are shown below:

Paint remover Laundry Detergent Sales price (per case) $50 $40 Variable costs (per case) $26 $20 Mytron ounces required per case 3 2 Maximum monthly demand (cases) 500 400

Assume that Ohio only has 2,000 ounces of mytron available next month. What is the maximum contribution margin that Ohio can generate from the two products?

2.

Smith produces 4,000 microwaves annually, but has capacity to produce much more. Each microwave produced has $22 of variable costs. Smith has an additional $32,000 of fixed cost related to microwave production. Microwaves are typically sold to retailers for $60. Wal-Mart, however, offers to purchase 1,000 microwaves at a discounted price of $35 each. If Smith accepts Wal-Marts order, Smith would incur special shipping costs of $5,000. If Wal-Marts order is accepted, by what amount would Smiths profit change?