The constraint at Frayer Inc. is a key raw material. A total of 9,700 ounces of this constrained resource are available. Data concerning the company's two products, Z78 and D87, appear below: Each unit of product Z78 requires 5 ounces of the constrained raw material; each unit of product D87 requires 2 ounces.
Required:
a. In the present circumstances, which product is most profitable?
b. How much of each product should be produced?
c. The company is considering launching a new product whose variable cost is $157 and that requires 26 ounces of the constrained resource. What is the minimum acceptable selling price for the new product?

Question

The constraint at Frayer Inc. is a key raw material. A total of 9,700 ounces of this constrained resource are available. Data concerning the company's two products, Z78 and D87, appear below:  Each unit of product Z78 requires 5 ounces of the constrained raw material; each unit of product D87 requires 2 ounces.
Required:
a. In the present circumstances, which product is most profitable?
b. How much of each product should be produced?
c. The company is considering launching a new product whose variable cost is $157 and that requires 26 ounces of the constrained resource. What is the minimum acceptable selling price for the new product?

Quizplus · Accepted Answer

The Answer of The constraint at Frayer Inc. is a key raw material. A total of 9,700 ounces of this constrained resource are available. Data concerning the company's two products, Z78 and D87, appear below:  Each unit of product Z78 requires 5 ounces of the constrained raw material; each unit of product D87 requires 2 ounces.
Required:
a. In the present circumstances, which product is most profitable?
b. How much of each product should be produced?
c. The company is considering launching a new product whose variable cost is $157 and that requires 26 ounces of the constrained resource. What is the minimum acceptable selling price for the new product?

The Constraint at Frayer Inc