Question

THE Company manufactures two products. Information
about these two products for the most recent year
is given below:

                         Product A    Product B
selling price per unit     $18          $16
variable costs per unit    $ 6          $ 5

THE's total expected fixed costs for the coming year
amount to $60,000.

It takes 5 machine hours and 3 direct labor hours to
produce one unit of Product A and it takes 4 machine
hours and 8 direct labor hours to produce one unit of
Product B. THE Company has 80,000 machine hours and
90,000 direct labor hours available for the coming
year.

Calculate the maximum amount of net income THE Company
can earn in the coming year.

Answer 1