The Constrained Resource at Nealen Corporation Is a Key Raw

Essay

The constrained resource at Nealen Corporation is a key raw material. A total of 9,800 ounces of the constrained resource are available. Data concerning the company's two products, B08 and O05, follow: $\begin{array}{lrr}&\text { B08 } & {O05} \\\text { Demand (units) }&1,040 & 1,550 \\\text { Selling price }&\$ 102.00 & \$ 124.00 \\\text { Variable cost }&\$ 61.20 & \$ 86.80\end{array}$ Product B08 requires 6 ounces of the constrained resource; product O05 requires 4 ounces.
Required:
a. Which product is most profitable, given the company's constraint?
b. How much of each product should be produced?
c. What is the total contribution margin if your plan in part (b) above is followed?