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ABC corporation makes products Alpha and Beta. Both products make use of the same equipment. The following were provided to you with regard to these

ABC corporation makes products Alpha and Beta. Both products make use of the same equipment. The following were provided to you with regard to these products in preparation for its budget for next year.

Weight per unit given Alpha Alpha Beta Beta
At 10,000 units At 12,500 units At 5,000 units At 8,000 units
Selling price 100 100 250 250
Less: Costs 70 62 230 170
Profit 30 38 20 80

Other information are as follows:

Alpha Beta
Expected market demand next year 10,000 units 6,000 units
Required Machine hours per unit 2 3
Total available machine hours 20,000

1. What is the contribution margin of Alpha if ABC was able to optimize the use of the machine hours?

2. How many units of Beta should be produced to maximize profits?

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