6.2 Product Mix with Limited Resources

Dubai Corporation makes two products, footballs and baseballs. Additional information follows:

Footballs Baseballs

Units 2,000 2,500

Sales $60,000 $25,000

Variable costs 24,000 13,750

Fixed costs 10,000 5,250

Net income $26,000 $ 6,000

Yards of leather per unit 1.25 0.30

Profit per unit $13.00 $2.40

Contribution margin per unit $18.00 $4.50

Assume that Dubai is able to order an additional 2,500 yards of leather and wishes to maximize its income. Of the additional units it produces, at least 500 of each product are necessary for sales.

Instructions

How many units of each must be produced? include formulas in detail