Mendosa Company produces three products. All the products use a furnace operatio
ID: 2358354 • Letter: M
Question
Mendosa Company produces three products. All the products use a furnace operation, which has a maximum number of 10,000 hours available for production of all three products. The following information is available:
Product 1 Product 2 Product 3
Unit demand monthly 1,000 1,500 1,000
Per unit information:
Sales $35.00 $33.00 $29.00
Variable Costs 15.00 15.00 15.00
Furnace hours 4 3 2
From a profitability perspective, what order of production and amount would maximize profit?
a. Mendosa should produce the three products in the following order and
amount: Product 1: 1,000 units, then
Product 2: 1,500 units, then
Product 3: 750 units
b. Mendosa should produce the three products in the following order and amount: Product 3: 1,000 units, then
Product 2: 1,500 units, then
Product 1: 875 units
c. Mendosa should produce the three products in the following order and amount: Product 1: 1,000 units, then
Product 2: 1,500 units, then
Product 3: 1,000 units
d. Mendosa should produce the three products in the following order and amount: Product 2: 1,500 units, then
Product 1: 1,000 units, then
Product 3: 750 units
Explanation / Answer
Mendosa should produce the three products in the following order and amount: Product 3: 1,000 units, then Product 2: 1,500 units, then Product 1: 875 units