1. Suppose that a product can be sold at split-off for $5,000 or processed further at a cost of $1,000 and then sold for $6,400. Should the product be processed further?
2. Why are fixed costs never relevant in a product mix decision?
3. Suppose that a firm produces two products. Should the firm always place the most emphasis on the product with the largest contribution margin per unit? Explain.
4. Why would a firm ever offer a price on a product that is below its full cost?
5. When can a firm legally offer different prices for the same product?
6. Discuss the purpose of linear programming.
7. What is an objective function? A constraint? A constraint set?
8. What is a feasible solution? A feasible set of solutions?
9. Explain the procedures for graphically solving a linear programming problem. What solution method is usually used when the problem includes more than two or three products?