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Wellington, Inc. manufactures three related products in its Colorado Springs facility. Relevant data are given below. The key material in these products is teflonium, a

Wellington, Inc. manufactures three related products in its Colorado Springs facility. Relevant data are given below. The key material in these products is teflonium, a rare mineral of which there is currently a shortage. In the near future, only 23,000 pounds per month of teflonium will be available, at a price of $180/lb.

Product A Product B Product C

Selling price/unit $1,200 $1,450 $1,950

Cost/unit:

Teflonium 360 540 720

Other materials 100 120 100

Direct labor 90 120 110

Variable overhead 20 20 20

Fixed OH (300% of DL) 270 360 330

Expected monthly demand is: A, 8,000 units; B, 4,000 units; C, 1,000 units.

Required: How much of each product should Wellington produce each month while the shortage lasts? Explain.

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