Question
A company sells two products with information as follows: A B Sales price per unit $11 $20 Variable cost per unit $10 $10 The products
A company sells two products with information as follows:
A | B | |
Sales price per unit | $11 | $20 |
Variable cost per unit | $10 | $10 |
The products are machine made. Four units of product A can be made with one machine hour and two units of product B can be made with one machine hour. The company has a maximum of 3,000 machine hours available per month. The company can sell up to 18,000 units of product A per month, and up to 3,000 units of product B for the month. What is the optimum product mix to maximize company's operating income?
A.
1,500 units of A and 36,000 units of B
B.
zero units of A and 3,000 units of B
C.
6,000 units of A and zero units of B
D.
-6,000 units of A and 3,000 units of B
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started