Part-1 of 3

Glocker Company makes three products in a single facility. These products have the following pricing, demand and cost structure for year 2021:

Per Unit. Alpha. Gama. Beta

Selling Price: $55.80. $54.60. $43.10

Variable Cost. $27.90. $31.20. $21.20

Yearly Demand (units). 2,000 1,200. 3,000

Fixed cost for the year is $450,000.

Although the company is doing well, there is always shortage of labor. As a result, the company needs to prioritize its productions plans. The company's production team has supplied the following information.

1 unit of Alpha requires 2 hours of labor, 1 unit of Gama requires 1.5 hours of labor and 1 unit of Beta requires 0.5 hours of labor. Only 4,600 hours of labor is available every year. Glocker employs 4 workers in production, each worker works 2,000 hours per year on average.

All products use the same raw material, a special organic compound. Purchase price of the organic compound is $20 per kg. Alpha requires 6 kg, Gama requires 3 kg and Beta requires 5 kg of the organic compound for each unit of production. The company can purchase only 35,000 kg per year because of shortage of raw materials.

The factory has enough machines to support the production.

Which input is a constraint for production of 2021?

Which input is not a constraint for production of 2021?

Which input may become a constraint for production of 2021?

Possible answers:

Direct Labor

Raw Material

Machine Hour

Cost of Organic Compound

Part-2 of 3

Use information from the previous question.

What is the Contribution Margin per unit of theConstrained Resource?

Alpha:

Gama:

Beta:

Possible answers:

1. A.4.38
2. B.15.60
3. C.29.20
4. D.4.65
5. E.13.95
6. F.7.80

Part-3of 3

To maximize the profitability, the company decided to produce the products in sequence. The most profitable product will be produced first to meet demand, then the next most profitable product will be produced to meet demand and then the least profitable product will be produced with the remaining resources.

1. Determine the order of prodcution. (1,2,3)

Alpha:____

Beta: ____

Gama____