Q. Zeta Company manufactures two products called Gamma and Deta that sell for $225 and $175, respectively.

Each product uses only one type of raw material that costs $6 per pound.

The company has the capacity to annually produce 130,000 units of each product.

Its average cost per unit for each product at this level of activity are given below:

	Gamma				Delta
Direct materials		$	42			$	24
Direct labor			42				32
Variable manufacturing overhead			26				24
Traceable fixed manufacturing overhead			34				37
Variable selling expenses			31				27
Common fixed expenses			34				29
Total cost per unit		$	209			$	173

The company considers its traceable fixed manufacturing overhead to be avoidable,

Common fixed expenses are unavoidable and have been allocated to products based on sales dollars.

Scroll down to answer all four questions that go with this problem.

Assume that Zetas customers would buy a maximum of 99,000 units of Gamma and 79,000 units of Delta.

Also assume that the companys raw material available for production is limited to 344,000 pounds.

How many units of each product should Zeta produce to maximize its profits?