Wakeman Products Inc. makes two products-W28H and Z28D. Product W28H's selling price is $27.00 and its unit variable cost is $21.60. Product Z28D's selling price is $170.00 and its unit variable cost is $153.00. The monthly demand is 2,030 units for product W28H and 730 units for Z28D. The constrained resource is a particular machine that is available for 9,500 minutes each month. Each unit of product W28H requires 3 minutes on this machine and each unit of product Z28D requires 10 minutes on this machine.
-How many units of product Z28D should be produced each month?
A) 341
B) 730
C) 0
D) 1,339

Question

Quizplus · Accepted Answer

To maximize profit, prioritize the product with the highest contribution margin per minute of machine time. Product Z28D has a contribution margin of $17 per unit and requires 10 minutes, giving $1.70 per minute. Product W28H has a contribution margin of $5.40 per unit and requires 3 minutes, giving $1.80 per minute. Therefore, prioritize W28H. After producing 2,030 units of W28H (6,090 minutes), 3,410 minutes remain for Z28D, allowing for 341 units (3,410/10).