Answer:
Maximum total profit = $4,800
Explanation:
When a business is faced with a problem of shortage of a resource which can be used to produced more than one product type, to maximize the use of the resource , the business should allocate it for production purpose in such a way that it maximizes the contribution per unit of the scare resource.
Therefore the Company should allocate the budget cost to maximize the profit per production cost. This is done as follows:
Calculate the profit per budget cost and rank the product
Gasoline Heating oil
Profit per product cost 3/6=0.5 4/8= 0.5
The two products produce the same profit per dollar of cost which is $0.5. So, they are equally ranked.
So the total profit= the budget cost × profit per budget
= 9,600× $0.5 =$4,800
Maximum total profit = $4,800
