A company sells two products with information as follows: The products are machi

Question

A company sells two products with information as follows: The products are machine made. Four units of product A can be made with one machine hour and two units of product B can be made with one machine hour. The company has a maximum of 4.000 machine hours available per month. The company can sell up to 18.000 units of product A per month, and up to 3.000 units of product B for the month. What is the optimum product mix to maximize company's operating income? zero units of A and 3,000 units of B 10,000 units of A and 3,000 units of B 1,500 units of A and 56,000 units of B 20,000 units of A and zero units of B

Explanation / Answer

A B Sales Price per Unit 12 22 Variable Cost per unit 10 10 Contribution per unit 2 12 Machine Hour 0.25 0.5 Contribution per Machine Hour 8 24 Ranking II I Maximum Demand 18000 3000 Product Mix Units Hours B 3000 1500 A 10000 2500 4000 The correct option is B. 10000 units of A and 3000 units of B

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