Fixed costs are not affected by the choice of product, Finance Basics

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Fixed costs are not affected by the choice of product

Question: A business makes three different products, the details of which are as follows:

Product (code name) B14 B17 B22

Selling price per unit (£) 25 20 23

Variable cot per unit (£) 10 8 12

Weekly demand (units) 25 20 30

Machine time per unit (hours) 4 3 4

Fixed costs are not affected by the choice of product because all three products use the same machine. Machine time is limited to 148 hours a week. Which combination of products should be manufactured if the business is to produce the highest profit?

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Finance Basics: Fixed costs are not affected by the choice of product

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