Acc505 Managerial Accounting: Witch's Brew Company manufactures and sells three potions

Acc505 Managerial Accounting

Witch's Brew Company manufactures and sells three potions that all use gargoyle eyelashes as an ingredient. The high demand for all three of these potions exceeds the supply of gargoyle eyelashes that Witch's Brew is able to buy from its suppliers. Information related to the three potions is provided below:
Passion potion Luck potion Smart potion
Selling price per bottle of potion 100 120 200
Variable cost per bottle of potion 70 84 130
Eyelashes required per bottle of potion 2 3 5
Maximum annual demand 1,000 1,500 1,800
Each year, Witch's Brew is only able to buy 6,000 gargoyle eyelashes. Annual fixed costs at Witch's Brew are $45,000.

Required:
Based on these restrictions, what is the maximum annual net operating income that Witch's Brew can make each year?
Powered by