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Question - 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:
Selling price Variable costs: Direct materials
Labour and other costs Quantity of Brac per unit A130 £252
£72 £84 8 lb.
Product B324 £168
£45 £81 5 lb.
C587
£210
£27 £120 3 lb.
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.
Required -
a. How many units of product A130, B324, and C587 should Wechsler produce?
b. What is the maximum amount Wechsler would be willing to pay for another 1,200 pounds of Brac?
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