Question
The Cape Cod Manufacturing Company produces four different tables: models R1, R2, R3, and R4. A limitation of 3,000 machine-hours per week prevents Cape Cod
The Cape Cod Manufacturing Company produces four different tables: models R1, R2, R3, and R4. A limitation of 3,000 machine-hours per week prevents Cape Cod Manufacturing Company from meeting the sales demands for its products. The product information is as follows: --------------------------------R1------------------ R2---------------------- R3------------------- R4 Unit selling price ------$900---------------- $600------------------- $350------------------ $600 Unit variable costs - --(600) - --------------(250) ------------------- (200) --------------- (300) Unit contribution margin -$300---------- $350--------------------- $150 -----------------$300 Machine-hours per unit 20----------------- 40------------------------ 20------------------- 30 Assume the maximum weekly demand for each product is as follows: Product------------------------------Demand R1 ------------------------------------80 units R2 ------------------------------------20 units R3 ------------------------------------70 units R4 ------------------------------------20 units Under these circumstances, how many units of each product should the company produce per week to maximize short-run profits?
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