A company sells two products with information as follows: $$\begin{array} { | l | c | c | }
\hline & \mathrm { A } & \mathrm { B } \
\hline \text { Sales price per unit } & \$ 12.00 & \$ 26.00 \
\hline \text { Variable cost per unit } & \$ 10.00 & \$ 12.00 \
\hline
\end{array}$$ The products are machine made.Four units of product A can be made with one machine hour and two units of product B can be made with one machine hour.The company has a maximum of 6000 machine hours available per month.The company can sell up to 18,000 units of product A per month,and up to 3000 units of product B for the month.What is the optimum product mix to maximize the company's operating income?

Question

A company sells two products with information as follows: $$\begin{array} { | l | c | c | } 
\hline & \mathrm { A } & \mathrm { B } \
\hline \text { Sales price per unit } & \$ 12.00 & \$ 26.00 \
\hline \text { Variable cost per unit } & \$ 10.00 & \$ 12.00 \
\hline
\end{array}$$ The products are machine made.Four units of product A can be made with one machine hour and two units of product B can be made with one machine hour.The company has a maximum of 6000 machine hours available per month.The company can sell up to 18,000 units of product A per month,and up to 3000 units of product B for the month.What is the optimum product mix to maximize the company's operating income?

Quizplus · Accepted Answer

The optimum product mix is to produce 18,000 units of product A and 3000 units of product B. This will maximize the company's operating income because it will use all of the available machine hours and sell all of the units that can be sold.

A Company Sells Two Products with Information as Follows The Products Are Machine Made