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    Step-by-step answer to Profit Maximization

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    ABC Co has 200 labor hours available. There is no limit on machine hours. ABC can sell all of Y it wants, but can only sell a maximum of 30 units of X and 20 units of Z.

    x y z
    Contribution Margin per Unit $20 $10 $16
    Labor Hours per Unit 4 5 4
    Machine Hours per Unit 10 8 2

    To maximize profits how many of each product should ABC make?

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    Solution Preview

    We first need to determine the contribution margin per unit of constrained resource. Labor hours is the constrained resource here as we have a maximum of 200 hours.

    Contribution Margin ...

    Solution Summary

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