Question
Penny Company produces three products: A100, B300, and C500. All three products use the same direct material, Zinc. Unit data for the three products is
Penny Company produces three products: A100, B300, and C500. All three products use the same direct material, Zinc. Unit data for the three products is as follows:
| A100 | B300 | C500 |
Selling Price | $248 | $155 | $212 |
Variable Costs |
|
|
|
Direct Materials | $66 | $39 | $25 |
Labour and other costs | $76 | $82 | $116 |
Quantity of Zinc | 10 lb. | 4 lb. | 4 lb. |
The demand for the products far exceeds the direct materials available to produce the products. Zinc costs $7 per pound, and a maximum of 5,400 pounds is available each month. Penny must produce a minimum of 210 units of each product.
Required
- How many units of product A100, B300, and C500 should Penny produce? Provide full support for your calculation.
- What is the maximum amount Penny Company would be willing to pay for another 1,260 pounds of Zinc?
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