Question

Needing Help with b and c.

Required information [The following information applies to the questions displayed below.] Clarke Corporation manufactures three products (X-1, X-2, and X-3) utilizing, in one of the processes, a single machine for all products. Data on the individual products follow.

   X-1 X-2 X-3

Price per unit $156    $256    $512

Variable cost per unit    $78 $139 $296

Machine hours per unit    1.0 2.5 4.0

Maximum units demand per period 370,000 178,000    62,000

The single machine used for all three products has a maximum capacity of 778,000 hours per period.

Required:

a. How many units of each product should be produced each period?

Needing Help with b and c.

b. A local engineering firm has suggested to Clarke that it might be able to increase the capacity on the machine. What is the maximum Clarke would be willing to pay for an increase of twenty (20) machine hours?

c. Suppose the maximum capacity on the machine was 426,000 hours (instead of 778,000 hours). What is the maximum Clarke would be willing to pay for an increase of twenty (20) machine hours?

d. At what capacity (in machine hours) would the machine no longer be a bottleneck?

Answer 1

(b) Particular X -2 x-3 Selling price texs louable cos $ 156 $ 256 $512 $78 contribution po $139 8296 $78 $ 816 MiH DO 1.0 2-5 4.0 contuibution Pee How $78 $46.8 $ 54 Ranking Demand 840,000 178,000 62.000 ALLOCCHIOng Hys 370,000 160,000 248.00 0 No. of units Puoduad 370,000 64.000 62.000

Contuibukon tout per hou on puoduo X-9- 946.8 maximum cake cooud be wilu'ng pay for crey increas en machine hove - $ 46.8 toe 20 hours - $46.8820 - $936 (C) 2 the maximum It the maximum capacity is 426000 Conteri bertion Cost pee how on puoduct X-3 - $ 54 maximum pee how toe 20 hocus - $54. – $54820 $1080