Question 4: Choosing the product mix when capacity is in short supply You have three product lines: Basic, Premium, and Supreme. You have limited capacity of 300 machine hours. You face excess demand for all three products (assume unlimited demand for simplicity).

	Basic	Premium	Supreme
Price per unit	$3,000	$7,000	$10,000
Unit variable cost	$1,000	$2,000	$3,000
Machine hours per unit	1	2	4

Compute the CM per unit of capacity (i.e, per machine-hour) for each product: Basic = $ per hour Premium = $ per hour Supreme = $ per hour Which product(s) should you make?

Supreme only

Premium only

Make all three products to take advantage of the high demand

Basic only

How many units of each product should you make? (enter 0 for products that you do not want to make) Basic = units Premium = units Supreme = units Hint if you get stuck: You have 300 machine hours.