Witch\'s Brew Company manufactures and sells three potions that all use gargoyle

Question

Witch's Brew Company manufactures and sells three potions that all use gargoyle eyelashes as an ingredient. The high demand for all three of these potions exceeds the supply of gargoyle eyelashes that Witch's Brew is able to buy from its suppliers. Information related to the three potions is provided below:
     Passion Potion    Luck Potion    Smart Potion
Selling price per bottle of potion    $100     $120     $200
Variable cost per bottle of potion    $70     $84     $130
Eyelashes required per bottle of potion    2    3    5
Maximum annual demand (in bottles)    1,000    1,500    1,800
Each year, Witch's Brew is only able to buy 6,000 gargoyle eyelashes. Annual fixed costs at Witch's Brew are $45,000.
Requirements
What is the maximum annual net operating income that Witch's Brew can make each year?  

Explanation / Answer

Passion Potion Luck Potion Smart Potion Selling price per bottle of potion $100 $120 $200 Variable cost per bottle of potion $70 $84 $130 Contribution per bottle $30 $36 $ 70 Eyelashes required per bottle of potion 2 3 5 Contribution per Eyelash $15 $12 $14 Maximum annual demand (in bottles) 1,000 1,500 1,800 Number of lashes used 2,000 4000 Contribution 30,000 56,000 Total contribution $86,000 Less Fixed cost $45,000 Net Income $41,000

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