ORION Exercise D812 Cullumber Inc three types of balloonssma

ORION Exercise D8-12 Cullumber, Inc. three types of balloons-small, medium, and large- with the following characteristks: $6 $8 $10 Variable cost per unit $4 per unit2.4 1,190 Demand in units The company has only 2,000 machine hours available each month. How many units of each type of balloon should the company make to maximize its total contribution margin? (Round answers to 0 decimal places, e.g. 5,275) 600 88o

Solution

Small Medium Large Contribution margin per unit 3 3 4 Machine hours per unit 1 2.4 3 Contribution margin per machine hour 3 1.25 1.33 Preference in Production 1 3 2 First small is to be produced, then Large and then Medium. Units of Small = 600 Machine hours left = 2000-(600*1) = 1400 Units of large = 1400/3= 467 Units Small 600 Medium 0 Large 467