Problem
Nkong, Inc. produces three types of products with the following information.
Product A Product B Product C
Unit sales price $ 100 $ 200 $ 400
Unit variable cost 60 140 300
Unit contribution margin 40 60 100
Machine time required 1 2 4
(minutes per unit)
Monthly demand (units) 20,000 50,000 80,000
Assume the company has only 300,000 minutes of machine time available during the month but requires 440,000 minutes to meet the demand for all three products.
A. How should the manager prioritize production of the three products?
B. Compute the number of units produced for each product.
C. The situation in this problem involved only one binding internal constraint , Write a memo to the CEO- Ms. Nkong Tankeng describing the process to identify the optimal mix of products.