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ABC Company manufactures three types of filing boxes. Each type requires the use of a special machine that has a limited capacity each year. Information
ABC Company manufactures three types of filing boxes. Each type | ||||||||
requires the use of a special machine that has a limited capacity each year. | ||||||||
Information on the three types of storage units is as follows: | ||||||||
Special machine capacity | 18,000 | |||||||
Basic | Standard | |||||||
Selling price | $ 10.80 | $ 36.00 | ||||||
Variable cost | $ 7.20 | $ 24.00 | ||||||
Machine hours required | 0.12 | 0.60 | ||||||
The company believes that it can sell as many units as it can produce for each | ||||||||
type of the products. | ||||||||
Required: | ||||||||
c) | Compute the number of each type of products to be produced | (4 Marks) | ||||||
to MAXIMIZE the company's contribution margin. | Basic | |||||||
(Hint: the type of product that has the highest contribuiton margin | ||||||||
per machine hour should be produced first, followed by the next highest | ||||||||
in order, and then the least contribution margin. The number of units | ||||||||
that can be produced is constrained by the special machine capacity.) | ||||||||
Standard |
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