David Limited Can Sell as Much Production as It Can

David Limited can sell as much production as it can make of each of its products. The company is currently facing a shortage of input materials for its products and has to decide which product to produce in the next three months in order to maximise its profits. Each kilogram of input material used in all four products costs £5. The company produces four products, A, B, C and D. The selling prices and cost information relating to these four products is as follows:
$\begin{array}{|c|c|c|c|}\hline \text { Product } & \begin{array}{c}\text { Selling price } \\\text { per unit of } \\\text { production }\end{array} & \begin{array}{c}\text { Kilograms of } \\\text { material used } \\\text { in one unit of } \\\text { production }\end{array} & \begin{array}{c}\text { Other variable } \\\text { costs per unit } \\\text { of production }\end{array} \\\hline & £ & \text { Kgs } & £ \\\hline \text { A } & 50 & 2 & 20 \\\hline \text { B } & 80 & 4 & 30 \\\hline \text { C } & 60 & 3 & 21 \\\hline \text { D } & 100 & 8 & 20 \\\hline\end{array}$
Which product should David Limited produce and sell in order to maximise profits over the next three months?

A) A
B) B
C) C
D) D

Correct Answer:

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