A company produces a product by blending chemical material A and chemical material B.

The
product must contain 39% of material A and 61% of material B. The company can buy up to
11000 pounds of material A at $83 per pound and 14000 pounds of material B at $114 per
pound. The product is package in 37-ounce container. The cost of to blend and package,
excluding the cost of the materials, is $26 per containter. The company sells the product for $330
per container. NOTE: Use 4 decimal places if necessary and do not use any comma. The
production cost (material. blending, packaging) per container is $ The contribution margin per
container is The company can produce up to containers.

Solution

Product A = $83 per pound, 39% per container

Product B = $114 per pound, 61% per container
Product A = $83/16 = $ 5.1875 per ounce
Product B = $114/16 = $ 7.125 per ounce
Cost for product A =(37 ounces)(.39)($5.1875 per ounce) = $74.85563
Cost for product B = (37 ounces)(.61)($7.125 per ounce) = $160.8113
Total Production Cost for a container:
$74.85563 + $160.8113 + $26 = $261.6669
Contribution Margin = $330 - $261.6669 = $68.3331per container
Since company can buy 11000 pounds of product A and 14000 pounds of product B
They will have enough product A to make
Product A Container = (11 000 lb)(16 ounces per pound) / (37 ounces)(.39) = 12196 containers
They will have enough product B to make
Product B Container = (14000 lb)(16 ounces per pound) / (37 ounces)(.61) = 9924 containers
Therefore, Product B will limit production to 9924 containers.