The company Color World manufactures three products that require the use of a special machine. There are only 20,000 machine hours available per month. Product information: Product A Product B Product C Sales price per unit $ 1,200.00 $ 1,600.00 $ 2,100.00 Variable costs per unit $ 700.00 $ 800.00 $ 1,000.00 Contribution margin per unit $ 500.00 $ 800.00 $ 1,100.00 Machine Time required (hours) 10/unit 20/unit 25/unit Estimated demand in units (per month) 500 1000 400 a) If all products require the same amount of machine-time and you can sell any amount of any product, which one should be manufactured to maximize profits? b) With the estimated demand, the machine-time restriction and the time required for each product, determine the optimal composition that should be sold of each of them, in units, to maximize profits.
The company Color World manufactures three products that require the use of a special machine. There are only 20,000 machine hours available per month. Product information: Product A Product B Product C Sales price per unit $ 1,200.00 $ 1,600.00 $ 2,100.00 Variable costs per unit $ 700.00 $ 800.00 $ 1,000.00 Contribution margin per unit $ 500.00 $ 800.00 $ 1,100.00 Machine Time required (hours) 10/unit 20/unit 25/unit Estimated demand in units (per month) 500 1000 400 a) If all products require the same amount of machine-time and you can sell any amount of any product, which one should be manufactured to maximize profits? b) With the estimated demand, the machine-time restriction and the time required for each product, determine the optimal composition that should be sold of each of them, in units, to maximize profits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Can you please answer this problem? Thanks
The company Color World manufactures three products that require the use of a special machine. There are only 20,000 machine hours available per month. Product information:
| Product A | Product B | Product C | |
| Sales price per unit | $ 1,200.00 | $ 1,600.00 | $ 2,100.00 |
| Variable costs per unit | $ 700.00 | $ 800.00 | $ 1,000.00 |
| Contribution margin per unit | $ 500.00 | $ 800.00 | $ 1,100.00 |
| Machine Time required (hours) | 10/unit | 20/unit | 25/unit |
| Estimated demand in units (per month) | 500 | 1000 | 400 |
a) If all products require the same amount of machine-time and you can sell any amount of any product, which one should be manufactured to maximize profits?
b) With the estimated demand, the machine-time restriction and the time required for each product, determine the optimal composition that should be sold of each of them, in units, to maximize profits.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education