Chapter 3.3, Problem 18E

Manufacturing (Note: Exercises #x2013;20 are from qualification examinations For Certified Public Accountants.) The Random Company manufactures two products, Zeta and Beta. Each product must pass through two processing operations. All materials are introduced at the start of Process No. 1. There are no work-in-process inventories. Random may produce either one product exclusively or various combinations of both products subject to the following constraints:

	Process No.1	Process No. 2	Contribution Margin (per unit)
Hours Required to Produce One Unit:
Zeta	1 hr	1 hr	$4.00
Beta	2 hr	3 hr	$5.25
Total Capacity (in hours per day)	1000 hr	1275 hr

A shortage of technical labor has limited Beta production to 400 units per day. There are no constraints on the production of Zeta other than the hour constraints in the above schedule. Assume that all relationships between capacity and production are linear. Source: American Institute of Certified Public Accountants.

Given the objective to maximize total contribution margin, what is the production constraint for Process No. 1? (Choose one of the following.)

(a) Zeta + Beta ≤ 1000 (b) Zeta + 2 Beta ≤ 1000

(c) Zeta + Beta ≥ 1000 (d) Zeta + 2 Beta ≥ 1000