Question

ABC Company produces three products: A, B, and C.
The company only has			300	labor hours per week to produce these 3 products
Product information is as follows:
	A	B	C
Unit selling price	140	75	240
Unit variable costs	100	50	180
Unit contribution margin	40	25	60
Labor hours per unit	5	4	6
Maximum demand in units per week	15	20	30
Required:
What is the optimal product mix(how many A, B, and C should be produced) the company would produce for a week based on only having 300 labor hours and the demand for each product?
Explain your answer and show computations.	Proucts arelsited aboce as A B C

Answer 1

Optimal Product mix will be :- Product C -30 unit, Product A- 15 Unit, Product B: 11 Unit

Detail working for your refrence

Working Note: computation of Contribution per Hour
Particulars	A	B	C
Sales Price (a)	$140.00	$75.00	$240.00
Unit Variable Cost ( b)	$100.00	$50.00	$180.00
Contribution (c=a-b)	$40.00	$25.00	$60.00
Labor Hour require per Unit (d)	5	4	6
Contribution per labour hour (c./d)	$8.00	$6.25	$10.00
Rank	II	III	I

Computation of No. of Unit can be Produced with 300 Labour Hour
Particulars	Units	hour/unit	Total Hours	Cummulative hours
Product -C	30	6.00	180	180
Product -A	15	5.00	75	255
Product -B Reamaining Hour(300-255)=45 Hour Product can be Produce ( 45 Hour / 4)	11	4.00	45	300