Lilienthal Products Inc. makes two products-M38O and E34G. Product M38O's selling price is $145.00 and its unit variable cost is $87.00. Product E34G's selling price is $300.00 and its unit variable cost is $210.00. The monthly demand is 1,590 units for product M38O and 640 units for E34G. The constrained resource is a particular machine that is available for 10,100 minutes each month. Each unit of product M38O requires 5 minutes on this machine and each unit of product E34G requires 10 minutes on this machine.
-How many units of product E34G should be produced each month?
A) 0
B) 1,435
C) 640
D) 215

Question

Quizplus · Accepted Answer

The contribution margin per minute for E34G is $9, while for M38O it is $11.6. To maximize profit, prioritize M38O. After producing 1,590 units of M38O, 215 units of E34G can be produced with the remaining machine time.