The Dot Company manufactures two products: X and Y. Contribution margin per unit

Question

The Dot Company manufactures two products: X and Y. Contribution margin per unit is determined as follows:

X

Revenue

$130

Variable costs
50

Contribution margin
$80

Y

Revenue

$80

Variable Costs

$60

Contribution margin

$20

Total demand for X is 10,000 units and for Y is 8,000 units. Machine hours are a scarce resource. 30,000 machine hours are available during the year. Product X requires 5 machine hours per unit while product Y requires 1 machine hours per unit.
How many units of X and Y should Dot Company produce to maximize profits? Why?

Explanation / Answer

max Z=80x+20y

s.t.

5x+y<=30000

x<=10000

y<=8000

x=4400 ; y=8000

max profit = 512000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.