Question

Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows:

	Product A		Product B		Product C
Sales price	$	54.00	$	64.00	$	94.00
Variable costs per unit		18.80		10.25		26.80
Fixed costs per unit		4.00		4.00		4.00
Required number of labor hours		2.00		2.50		4.00

Cordova currently is limited to 60,000 labor hours per month. Cordova’s marketing department has determined the following demand for its products:

Product A	14,000	units
Product B	10,000	units
Product C	6,000	units

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

Answer 1

	Products	A	B	C
	Sales Price	54.00	64.00	94.00
	Less: Variable Expense	18.80	10.25	26.80
	Contribution Margin	35.20	53.75	67.20
	Direct Labor Hours	2.00	2.50	4.00
	Contribution Margin Per DLH	17.60	21.50	16.80
	Ranking	II	I	III
	Products	Ranking	Direct Labor Hours	Units Produced	Total DLHs
	A	II	2.00	14,000	28,000	Entire Production basis Ranking
	B	I	2.50	10,000	25,000	Entire Production basis Ranking
	C	III	4.00	1,750	7,000	Balance Resources post A & B (60000-28000-25000)
				(7000/4)	60,000
	Products
	A	14,000
	B	10,000
	C	1,750