Problem
Product mix, constrained resource. Wechsler Company produces three products: A130, B324, and C587. All three products use the same direct material, Brac. Unit data for the three products are:
A130 B324 C587
Selling price $252 $168 $210 Variable Costs:
Direct Materials $72 $45 $27
Labor and other costs $84 $81 $120 Quantity of Brac/unit 8lb 5lb 3lb
The demand for the products far exceeds the direct materials available to produce the products. Brac costs $9 per pound, and a maximum of 5,000 pounds is available each month. Wechsler must produce a minimum of 200 units of each product
Task
i. How many units of product A130, B324, and C587 should Wechsler produce?
ii. What is the maximum amount Wechsler would be willing to pay for another 1,200 pounds of Brac?