Question

EA Manufactures two computer games SWGOH and ZSOS. SWGOH selling price is $75 per unit and variable costs are $40 per unit. ZSOS selling price is $60 per unit and variable costs are $20 per unit. EA production capacity is 3,000 machines hours. It takes 20 minutes to manufacture ZSOS. Maximum demand is 6,000 units for SWGOH AND 7,000 units for ZSOS. How many units of ZSOS will EA should make?

Answer 1

Answer :

EA manufactures 2 computer games SWGOH and ZSOS

EA Production Capacity = 3,000 machine hours

Particulars	SWGOH	ZSOS
Selling Price (a)	$ 75	$ 60
Variable Cost (b)	$ 40	$ 20
Contribution (a - b)	$ 35	$ 40
Time Taken		20 minutes (for 1 unit )
Maximum Demand	6,000 units	7,000 units

Since Contribution per unit of ZSOS is more( which is $ 40 per unit ) by $ 5 from SWGOH.

So, EA shpould produce more of ZSOS.

Further, Maximum Demand of ZSOS is 7,000 units so, EA should not Produce more than 7,000 units . It is given that 20 minutes are taken for production of 1 unit of ZSOS .

EA production capacity is 3,000 machines hours, So, Firstly we are going to make maximum , 7,000 units of ZSOS and balance hours will be utilised for Production of units of  SWGOH Computer game.

Now, Hours require for Production of 1 unit of ZSOS

= 20 minutes / 60 minutes

= 0.33333 hour is required for production of 1 unit of ZSOS game .

FOR , 7,000 units

= 0.333333 hour per unit * 7,000 units

= 2,333.3333 hours required for Production of 7,000 units of ZOSS.

So, EA should make 7,000 units of ZSOS which will take approx 2,333 hours of production capacity out of total of 3,000 hours.

Balance 667 hours will be utilised for production of SWGOH, Subject to maximum of 6,000 units .

Note : we are going to make maximum units of ZSOS which is 7,000 units because the contribution per unit of ZSOS computer game is more by $ 5 per unit as compared to SWGOH computer game .