Question
Witch's Brew Company manufactures and sells three potions that all use gargoyle eyelashes as an ingredient. The high demand for all three of these potions
Witch's Brew Company manufactures and sells three potions that all use gargoyle eyelashes as an ingredient. The high demand for all three of these potions exceeds the supply of gargoyle eyelashes that Witch's Brew is able to buy from its suppliers. Information related to the three potions is provided below:
Passion Potio
Selling price per bottle of potion $100
Variable cost per bottle of potion $70
Eyelashes required per bottle of potion 2
Maximum annual demand (in bottles) 1,000
Luck Potion
Selling price per bottle of potion $120
Variable cost per bottle of potion $84
Eyelashes required per bottle of potion 3
Maximum annual demand (in bottles) 1,500
Smart Potion
Selling price per bottle of potion $200
Variable cost per bottle of potion $130
Eyelashes required per bottle of potion 5
Maximum annual demand (in bottles) 1,800
Each year, Witch's Brew is only able to buy 6,000 gargoyle eyelashes. Annual fixed costs at Witch's Brew are $45,000.
Requirements
What is the maximum annual net operating income that Witch's Brew can make each year?
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