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Problem - A company produces three different products that all require processing on the same machines. The company has only 27,000 machine hours available in each year. Production information for each product is:
A
B
C
Sales price per unit
$20.00
$38.00
$35.00
Variable costs per unit
$12.00
$26.00
$17.00
Machine hours necessary to produce one unit
25
4.0
4.50
Required -
(1) Determine the preferred sales mix if there are no market constraints on any of the products.
(2) Determine the preferred sales mix if the demand is limited to 5,000 units for each product.
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Merline, a one-product mail-order firm, buys its product for $ 75 per unit and sells it for $ 150 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows.
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