Product Mix Decision, Single Constraint

Sealing Company manufactures three types of DVD storage units. Each of the three types requires the use of a special machine that has a total operating capacity of $15,000$ hours per year. Information on the three types of storage units is as follows:

Line Item Description Basic Standard Deluxe

Selling price $$9\mathrm{.}00$ $$30\mathrm{.}00$ $$35\mathrm{.}00$

Variable cost $$6\mathrm{.}00$ $$20\mathrm{.}00$ $$10\mathrm{.}00$

Machine hours required $0\mathrm{.}100\mathrm{.}500\mathrm{.}75$

Sealing's marketing director has assessed demand for the three types of storage units and believes that the firm can sell as many units as it can produce.

Required:

$1.$ How many of each type of unit should be produced and sold to maximize the company's contribution margin? If an amount box does not require an entry, leave it blank or enter $"0".$ If required, round your answers to the nearest whole value.

Line Item Description Answer

Basic fill in the blank $1$

units

Standard fill in the blank $2$

units

Deluxe fill in the blank $3$

units

What is the total contribution margin for your selection?

fill in the blank $1$ of $1$$

$2.$ Now suppose that Sealing Company believes that it can sell no more than $12,000$ of the deluxe model but up to $50,000$ each of the basic and standard models at the selling prices estimated. What product mix would you recommend? If required, round your answers to the nearest whole value.

Line Item Description Answer

Basic fill in the blank $5$

units

Standard fill in the blank $6$

units

Deluxe fill in the blank $7$

units

What would be the total contribution margin?