A company produces three products, named A, B and C. The revenue generated by on

Question

A company produces three products, named A, B and C. The revenue generated by one sale of each product A, B and C is $2, $3 and $1.50, respectively. Product C is expected to outsell the other two products with annual sales equal to 500 units. Product A will run a close second with 400 annual sales, but product B will be a distant third with only 100 sales for the year. The inputs for the three products were tracked during the year, and average amounts of labour and material to produce a single unit of each product are listed in the table below: Table 1 – Resources to produce a single unit of each product, A, B, and C. Product A Product B Product C Labour (hr/unit) 0.25 0.50 0.10 Material (g/unit) 1.50 2.00 1.00 If the cost of labour is $10.00/hr and the material costs $0.10/g, what is the profit for the year? (Use matrices, in a single equation, to calculate the profit.)

Explanation / Answer

HEre total revenue generated = 2(400)+ 3(100)+1.5(500 ) = 800+ 300 + 750 = $ 1850

Now total labour charge based on table given = 400(10)(0.25) + 100 (10)(0.50 ) + 500 ( 10) (0.10)

= 1000 + 500 + 50 = $1550

And total material cost = 400(1.5) (0.1)+ 100(2)(0.1)+ 500(1)(0.1) = 60+20 + 50 = $130

So total cost price of all units produced = $1550 + $130 = $ 1680

So total profit = Total revenue - Total cost

= $1850 - 1680 = $ 170

that is last required answer.

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