What is the maximum monthly rent

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Reference no: EM132543167

Question - Winika Company produces three products with the following information:

 

Product

 

Good

Better

Best

Selling price per unit

$17

$19

$26

Variable cost per unit

$8

$10

$12

Machine-hours per unit (MH/unit)

2

3

4

The company has a limit of 14,300 machine-hours available per month and a monthly fixed cost of $35,000. The demand for each of the products is 2,500 units per month.

The company's goal is to maximize its profitability.

Suppose the company can rent a machine that will provide an additional 1,120 machine-hours per month.

Required - What is the maximum monthly rent the company should be willing to pay for this machine (assuming they've made optimal use of their own machine)?

Reference no: EM132543167

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