Question
JKL Ltd produces three products: A, B, and C. The following information is provided: Product Selling Price per Unit ($) Variable Cost per Unit ($)
JKL Ltd produces three products: A, B, and C. The following information is provided:
Product | Selling Price per Unit ($) | Variable Cost per Unit ($) | Contribution Margin per Unit ($) | Machine Hours per Unit |
A | 50 | 30 | 20 | 2 |
B | 40 | 20 | 20 | 1 |
C | 30 | 10 | 20 | 1.5 |
The total available machine hours are limited to 3,000 hours per month.
Required: a. Determine the contribution margin per machine hour for each product. b. Formulate the optimal product mix to maximize the total contribution margin. c. Calculate the total contribution margin based on the optimal product mix. d. Discuss the impact of relaxing the machine hour constraint by 500 hours on the optimal product mix and total contribution margin.
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