Question
ABC Company produces Product X, Product Y, and Product Z. All three products require processing on specialized finishing machines. The capacity of these machines is
ABC Company produces Product X, Product Y, and Product Z. All three products require processing on specialized finishing machines. The capacity of these machines is 2,160 hours per month. ABC Company wants to determine the product mix that should be achieved to meet the high demand for each product and provide the maximum profit. Following is information about each product:
Product X | Product Y | Product Z | |||||||
Selling price | $ | 147 | $ | 120 | $ | 36 | |||
Variable costs | 107 | 59 | 28 | ||||||
Machine time per unit | 3 | hours | 3 | hours | 1 | hour | |||
Monthly demand (units) | 430 | 290 | 760 | ||||||
Required:
Determine how the 2,160 hours of machine time should be allocated to the three products to provide the most profitable product mix. (Do not round intermediate calculations.)
Allocated Machine Time Product X Product Y Product 2Z hours hours hoursStep 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