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A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials to produce; Product B sells for $75 but needs $30 of materials to produce; Product C sells for $100 but needs $50 of materials to produce; Product D sells for $150 but needs $75 of materials to produce. The processing requirements for each product on each of the four machines are shown in the table. product (process time/unit)

A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials to produce; Product B sells for $75 but needs $30 of materials to produce; Product C sells for $100 but needs $50 of materials to produce; Product D sells for $150 but needs $75 of materials to produce. The processing requirements for each product on each of the four machines are shown in the table. product (process time/unit)

Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter12: Integer Linear Optimization_models
Section: Chapter Questions
Problem 6P: Hart Manufacturing makes three products. Each product requires manufacturing operations in three...
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Table 7.5 A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials to produce; Product B sells for $75 but needs $30 of materials to produce; Product C sells for $100 but needs $50 of materials to produce; Product D sells for $150 but needs $75 of materials to produce. The processing requirements for each product on each of the four machines are shown in the table. product (process time/unit) A B C D Work center W 6 3 12 X 9 10 4 8 4 y 12 9 Z 10 7 11 Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions that follow, the full cost method refers to maximizing the gross margin or product margin per unit for each product, the contribution margin approach refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the throughput contribution margin for each product. Assume all products start at machine W then are processed in order at X, Y and Z. Assume each worker works one 40 hour shift per week and is paid $10 per hour. Further, weekly overhead for the plant is $6000. During your calculations, carry all work to three decimal places Use the information in Table 7.5. Based on throughput contribution margin and assuming direct labor is a relevant and variable cost, which product is the most profitable? 0000 COUP
Transcribed Image Text:Table 7.5 A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials to produce; Product B sells for $75 but needs $30 of materials to produce; Product C sells for $100 but needs $50 of materials to produce; Product D sells for $150 but needs $75 of materials to produce. The processing requirements for each product on each of the four machines are shown in the table. product (process time/unit) A B C D Work center W 6 3 12 X 9 10 4 8 4 y 12 9 Z 10 7 11 Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions that follow, the full cost method refers to maximizing the gross margin or product margin per unit for each product, the contribution margin approach refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the throughput contribution margin for each product. Assume all products start at machine W then are processed in order at X, Y and Z. Assume each worker works one 40 hour shift per week and is paid $10 per hour. Further, weekly overhead for the plant is $6000. During your calculations, carry all work to three decimal places Use the information in Table 7.5. Based on throughput contribution margin and assuming direct labor is a relevant and variable cost, which product is the most profitable? 0000 COUP
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