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Category > Business & Finance Posted 29 Jul 2017 My Price 5.00

PRODUCT MIX DECISION, SINGLE CONSTRAINT

PRODUCT MIX DECISION, SINGLE CONSTRAINT

Behar Company makes three types of stainless steel frying pans. Each of the three types of pans requires the use of a special machine that has total operating capacity of 182,000 hours per year. Information on each of the three products is as follows:

 

Basic

Standard

Deluxe

Selling price

$12.00

$17.00

$32.00

Unit variable cost

$7.00

$11.00

$12.00

Machine hours required

0.10

0.20

0.50

The marketing manager has determined that the company can sell all that it can produce of each of the three products.

Required:

1. How many of each product should be sold to maximize total contribution margin? What is the total contribution margin for this product mix?

2. Suppose that Behar can sell no more than 300,000 units of each type at the prices indicated. What product mix would you recommend, and what would be the total contribution margin?

Behar Company makes three types of stainless steel frying pans. Each of the three types of pans requires the use of a special machine that has total operating capacity of 182,000 hours per year. Information on each of the three products is as follows:

 

Basic

Standard

Deluxe

Selling price

$12.00

$17.00

$32.00

Unit variable cost

$7.00

$11.00

$12.00

Machine hours required

0.10

0.20

0.50

The marketing manager has determined that the company can sell all that it can produce of each of the three products.

Required:

1. How many of each product should be sold to maximize total contribution margin? What is the total contribution margin for this product mix?

2. Suppose that Behar can sell no more than 300,000 units of each type at the prices indicated. What product mix would you recommend, and what would be the total contribution margin?

Answers

Homework Helper
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Status NEW Posted 29 Jul 2017 02:07 PM My Price 5.00

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