Benkhadour Co. manufactures four different products. Because the quality of its products is high, the demand for them is greater than the company can satisfy.

Based on the inquiries made by current and potential customers, you have estimated the following for the coming year:

Product		Estimated Demand in Units		Selling Price per Unit		Direct Materials Cost per Unit		Direct Labour Cost per Unit
A		8,000		$50		$5		$5
B		24,000		60		10		9
C		20,000		150		25		30
D		30,000		100		15		20

The following information is also available:

1. The direct labour rate is $15 per hour and the factory has a capacity of 80,000 hours. For the next

year, Benkhadour is unable to expand this capacity.

2. Benkhadour is unwilling to increase its selling prices.

3. Apart from direct materials and direct labour, the only other variable expense is variable

overhead. The variable overhead is 50% of the direct labour cost.

4. Fixed manufacturing overhead is estimated to be $1 million for the coming year. Fixed marketing

and administrative expenses are estimated to be $750,000 for the coming year.

Instructions

Determine which products and how many units of each Benkhadour should produce in the coming year in order to maximize its operating income.