ABC Company produces Product X, Product Y and Product Z. All three products require processing on specialized finishing machines. The capacity of these machines is 3,600 hours per month. ABC Company wishes to determine the product mix that should be achieved to meet the high demand for each product and provide the maximum profit. Following is information about each product:
Product X
Selling price.................$300
Variable costs................$210
Machine time per unit......6 hours
Monthly demand (units)....360
Product Y
Selling Price.................$240
Variable Costs...............$120
Machine time per unit.....4 hours
Monthly demand (units)...240
Product Z
Selling Price.................$76
Variable Costs...............$60
Machine time per unit.....2 hours
Monthly demand (units)...600
A.) Determine how the 3,600 hours of machine time should be allocated to the three products to provide the most profitable mix.