Question

show all work please!

Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows: Product A Product B $53.00 13.00 Product C Sales price $83.00 $43.00 19.90 35.90 Variable costs per unit Fixed costs per unit Required number of labor hours 5.00 5.00 5.00 3.00 1.50 2.50 Cordova currently is limited to 45,000 labor hours per month. Cordova's marketing department has determined the following demand for its products: Product A 10,000 units 7,000 units 5,000 units Product B Product C Required: Given the company's limited resource and expected demand, compute how many units of each product Cordova should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first. Round your answers to the nearest whole number.) Product Units Produced 7,000 C A

Answer 1

1 Solution: 2 3 Calculation of no. of units Cordova Manufactures to be produced to maximize its profits- 4 Since the company is limited to 45000 labour hours per month. Therfore Labour hours is a Limited Resource, 5 so we have to calculate Contribution per labour hours to find out which product should be produced first 5 and how much quantity of that product should be produced- 7 3 Contribution Per labour Hour (Key Factor ) Product C (In $) Product A Product B 9 Particulars L0 Sales Price Per Unit (a) 1 Less :Variable Cost Per Unit (b) 12 Contibution Per Unit c a - b) 13 Required No. of Labour Hours (d) 43.00 53.00 83.00 19.90 13.00 35.90 23.10 40.00 47.10 2.50 3.00 1.50 14 Contribution Per labour Hour ( c/d) 15 15.70 15.40 16.00 16 17 18 19 20

A 15 26 Since Contibution per labour hour is higher in case of Product B , Therefore Company should produce 7 Product B first, then Product C and then Product A. 8 Total Labour Hours 45000 Hours Expected Demand Labour Hours Req per Unit Total Labour Hours 1 Particulars Remaining Labour Hours :2 Product B 7000 Units 2.50 Hours 17500 Hours 27500 Hours (7000 2.5 Hours) 45000 Hrs 17500 Hrs) 3 4 5 Product C 5000 Units 3 Hours 15000 Hours 12500 Hours |(5000 3 Hours) (27500 Hrs 15000 Hrs) 6 7 8333 Units (B/F) 1.50 Hours 8 Product A 12500 Hours 12500 Hours 12500 Hours/1.5 Hrs per unit) (Remaining Hours) 0 1 3 No. of Units Company should produce 4 Product 15 Product B |Units Produced 7000 Units 5000 Units 6 Product C 7 Product A 8333 Units