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Wasp company produces three products with the following information: Product A B C Selling price per unit $17 $19 $26 Variable cost per unit $8
Wasp company produces three products with the following information:
Product | |||
A | B | C | |
Selling price per unit | $17 | $19 | $26 |
Variable cost per unit | $8 | $10 | $12 |
Machine-hours per unit (MH/unit) | 2 | 3 | 4 |
The company has a limit of 13,800 machine-hours available per month and a monthly fixed cost of $8,500. The demand for each of the products is 2,500 units per month.
The companys goal is to maximize its profitability.
Suppose the company can rent a machine that will provide an additional 1,530 machine-hours per month.
Q.: What is the maximum monthly rent the company should be willing to pay for this machine (assuming theyve made optimal use of their own machine)?
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