Company has recently experienced a labor strike by its machine operators and consequently production is limited...

 

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Company has recently experienced a labor strike by its machine operators and consequently production is limited by machine hours (scarce resource). Fixed Costs per month $110,000 Sales Variable Costs Contribution Margin Machine hours required per unit Product L $45 (30) 15 5 hrs Product M $28 Scarce Resource Machine hours limited to 90,000 hours per month 20 8 2 hrs 1. Which product(s) should be produced to maximize profits? Show calculation: Product L 2. Assume that demand for Product Lis unlimited but demand for Product M is limited to 30,000 units. Determine how many units to make of each product to maximize profits. Product M Product L 3. How much profit would the company make per month using your recommendation in (2) 4. What number of units of each product would you produce IF demand for Product M was unlimited? Product M Company has recently experienced a labor strike by its machine operators and consequently production is limited by machine hours (scarce resource). Fixed Costs per month $110,000 Sales Variable Costs Contribution Margin Machine hours required per unit Product L $45 (30) 15 5 hrs Product M $28 Scarce Resource Machine hours limited to 90,000 hours per month 20 8 2 hrs 1. Which product(s) should be produced to maximize profits? Show calculation: Product L 2. Assume that demand for Product Lis unlimited but demand for Product M is limited to 30,000 units. Determine how many units to make of each product to maximize profits. Product M Product L 3. How much profit would the company make per month using your recommendation in (2) 4. What number of units of each product would you produce IF demand for Product M was unlimited? Product M