KnitWorks Ltd. produces three kinds of yarn. Details of each type of yarn are as follows: $\begin{array}{lccc}
&\text { Type I } & \text { Type II } & \text { Type III } \
\text { Price per unit } & £ 200 & £ 250 & £ 100 \
\text { Unit variable cost } & £ 150 & £ 100 & £ 60 \
\text { Machine hours required } & 0.5 & 2.0 & 0.1
\end{array}$ KnitWorks has 15,000 machine hours available for production.
a.Determine the amount of each type of yarn that KnitWorks should produce.
b.Assume that the demand for each type of yarn is limited to 10,000 units each. Determine the amount of each type of yarn that KnitWorks should produce.
c.Assume that the demand for each type of yarn is limited to 10,000 units each. Determine KnitWorks' contribution margin.

Question

KnitWorks Ltd. produces three kinds of yarn. Details of each type of yarn are as follows: $\begin{array}{lccc}
&\text { Type I } & \text { Type II } & \text { Type III } \
\text { Price per unit } & £ 200 & £ 250 & £ 100 \
\text { Unit variable cost } & £ 150 & £ 100 & £ 60 \
\text { Machine hours required } & 0.5 & 2.0 & 0.1
\end{array}$ KnitWorks has 15,000 machine hours available for production. 
a.Determine the amount of each type of yarn that KnitWorks should produce.
b.Assume that the demand for each type of yarn is limited to 10,000 units each. Determine the amount of each type of yarn that KnitWorks should produce.
c.Assume that the demand for each type of yarn is limited to 10,000 units each. Determine KnitWorks' contribution margin.

Quizplus · Accepted Answer

The Answer of KnitWorks Ltd. produces three kinds of yarn. Details of each type of yarn are as follows: $\begin{array}{lccc}
&\text { Type I } & \text { Type II } & \text { Type III } \
\text { Price per unit } & £ 200 & £ 250 & £ 100 \
\text { Unit variable cost } & £ 150 & £ 100 & £ 60 \
\text { Machine hours required } & 0.5 & 2.0 & 0.1
\end{array}$ KnitWorks has 15,000 machine hours available for production. 
a.Determine the amount of each type of yarn that KnitWorks should produce.
b.Assume that the demand for each type of yarn is limited to 10,000 units each. Determine the amount of each type of yarn that KnitWorks should produce.
c.Assume that the demand for each type of yarn is limited to 10,000 units each. Determine KnitWorks' contribution margin.

KnitWorks Ltd KnitWorks Has 15,000 Machine Hours Available for Production