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Islander company produces three products, land, earth and fire. Land sells for $40, Earth for $80 and Fire for $60. Variable costs per product: Variable

Islander company produces three products, land, earth and fire. Land sells for $40, Earth for $80 and Fire for $60.

Variable costs per product:

Variable cost

Land

Earth

Fire

Direct materials

$12

$20

$16

Direct labour

$3

$15

$20

Other variable

$19

$25

$14

All three products use same material, Planet. The demand for product far exceeds the direct material available to produce the products. Planet costs $4 per unit and a maximum of 4,000 units are available each month. Islander must produce a minimum of 250 of each product. How many units of Planet will Fire use to produce the required amount to maximum its operating margin?

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