Exercise 8-12 2 Your answer is partially correct. Try again. Pharoah, Inc. produ

Question

Exercise 8-12 2 Your answer is partially correct. Try again. Pharoah, Inc. produces three types of balloons-small, medium, and large -with the following characteristics: Small Medium Large $8 $10 Selling price per unit Variable cost per unit Contribution margin per unit Machine hours per unit Demand in units $3 2.4 580 1,100 960 The company has only 2,000 machine hours available each month. How many units of each type of balloon should the company make to maximize its total contribution margin? (Round answers to 0 decimal places, e.g. 5,275.) Units Small 580 Medium Large Click if you would like to Show Work for this question:

Explanation / Answer

Answer

2000-580

=1420

(we will meet demand in order of ranking.since "small has highest contribution per hour "we will first manufacture this product and then large and last medium)

Hence Units for

Small 580 units

Large 1420/3 =473

Medium =Nil

Particulars Small Medium Large contribution per unit   $4 $3 $4 hours required per unit 1 2.4 3 contribution per hour   $4 $1.25 $1.33 Ranking 1 3 2

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