Assume an engineering company provides services for three types of clients. Each

Question

Assume an engineering company provides services for three types of clients. Each service requires a different amount of a specific form of specialized labor that is in limited supply. If the company is limited to 14,000 hours of this specialized labor, how many clients of each type should it accept in order to maximize operating income?

Client Type

A

B

C

Revenue per client

$1,600

$4,500

$2,400

Variable costs per client

$600

$1,800

$1,000

Specialized labor hours required per client

8

25

10

Maximum clients available

700

400

500

Client Type

A

B

C

Revenue per client

$1,600

$4,500

$2,400

Variable costs per client

$600

$1,800

$1,000

Specialized labor hours required per client

8

25

10

Maximum clients available

700

400

500

Explanation / Answer

Calculation of Contribution Per Hour & Ranking based on highest contribution per hour

Calculation of Allocated Hours

Calculation of Number of Clients

Particulars A B C Revenue Per Client (A) 1600 4500 2400 Less: Variable cost per client (B) -600 -1800 -1000 Contribution Per Client (A-B) 1000 2700 1400 Labour Hours required Per Client 8 25 10 Contribution per Labour Hour : Contribution/Labour Hour 125 108 140 Rank 2 3 1

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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