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Exam IIA-CIA-Part3 topic 1 question 46 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 46
Topic #: 1
[All IIA-CIA-Part3 Questions]

An organization produces two products, X and Y. The materials used for the production of both products are limited to 500 kilograms (kg) per month. All other resources are unlimited and their costs are fixed. Individual product details are as follows:

Product X -

Product Y -

Selling price per unit -
$10
$13
Materials per unit (at $1/kg)
2 kg
6 kg

Monthly demand -
100 units
120 units
In order to maximize profit, how much of product Y should the organization produce each month?

  • A. 50 units.
  • B. 60 units.
  • C. 100 units.
  • D. 120 units.
Show Suggested Answer Hide Answer
Suggested Answer: A 🗳️
by Brad626 at Nov. 3, 2020, 7:46 p.m.

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koziolmutant
Highly Voted 3 years, 4 months ago
it looks like product X demand should be fulfilled, so 100 units times 2 kg of materials = 200 kg of materials used. Materials left counts 300 kg which gives 50 units (300/6) of product Y.
upvoted 8 times
dnsl18
3 years, 3 months ago
This makes sense. Thank you
upvoted 1 times
...
John1237
1 year, 7 months ago
Even with option B (60 units of Y), the profit is $6080.
upvoted 1 times
...
John1237
1 year, 7 months ago
If the objective is to maximize profit, this formula gives only $5900 which is [(100 x 2 x 10) + (50 x 6 x 13)] whereas, if production meets a demand of 10 units of x and 80 units of y, the profit is $6440 which is [(10 x 2 x 10) + (80 x 6 x 13)]
upvoted 1 times
...
...
timofejj007
Most Recent 2 years, 5 months ago
we get 10-2 = 8 margin from X and 13-6=7 for Y, it means we should maximize product X and then produce product Y
upvoted 2 times
...
dnsl18
3 years, 4 months ago
Pls explain the answer
upvoted 3 times
...
Brad626
3 years, 5 months ago
Badly-formatted problem
upvoted 3 times
...

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C (25%)
B (20%)
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