Step-by-step answer to profit maximization


Problem: ABC Co has 200 labor hours available. There is no limit on machine hours. ABC can sell all of Y it wants, but can only sell a maximum of 30 units of X and 20 units of Z.

                                          x     y     z
Contribution Margin per Unit $20 $10 $16
Labor Hours per Unit             4     5    4
Machine Hours per Unit         10    8    2

To maximize profits how many of each product should ABC make?

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Accounting Basics: Step-by-step answer to profit maximization
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