Vollmer Manufacturing makes three components for sale to refrigeration companies. The components are processed on two machines: a shaper and a grinder. The times (in minutes) required on each machine are as follows:

Component Shaper Grinder 1 6 4 2 4 5 3 4 2 The shaper is available for 120 hours, and the grinder for 110 hours. No more than 200 units of component 3 can be sold, but up to 1,000 units of each of the other components can be sold. In fact, the company already has orders for 600 units of component 1 that must be satisfied. The per unit selling price and per unit variable cost for each of the three components are as follows: Component Selling Price Material Cost Labor Cost 1 $25 $12 $5 2 $18 $8 $4 3 $27 $13 $5

a. For each component, calculate the profit margin (profit margin = selling price material cost labor cost). Formulate and solve for the recommended production quantities that will maximize contribution to profit. (2 points)

b. If one more hour could be made available on the grinder, how much would it be worth? ( 1/2 point) c. If one more unit of component 3 can be sold by reducing the sales price by $4, should the company reduce the price? (1/2 point) (please show how to do solutions in excel)

c. If one more unit of component 3 can be sold by reducing the sales price by $4, should the company reduce the price? (1/2 point)

\begin{tabular}{|l|l|l|} \hline Component & Shaper & Grinder \\ \hline 1 & 6 & 4 \\ \hline 2 & 4 & 5 \\ \hline 3 & 4 & 2 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline Component & Selling Price & Material Cost & Labor Cost \\ \hline 1 & $25 & $12 & $5 \\ \hline 2 & $18 & $8 & $4 \\ \hline 3 & $27 & $13 & $5 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline Component & Shaper & Grinder \\ \hline 1 & 6 & 4 \\ \hline 2 & 4 & 5 \\ \hline 3 & 4 & 2 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline Component & Selling Price & Material Cost & Labor Cost \\ \hline 1 & $25 & $12 & $5 \\ \hline 2 & $18 & $8 & $4 \\ \hline 3 & $27 & $13 & $5 \\ \hline \end{tabular}