Managerial Accounting

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Fragrance Inc. Constraint: Production to Maximize Profit


Fragrances Inc. (FI) makes three types of perfumes, all of which require a special orchid oil. Due to heavy pesticide use, the bees that pollinate this rare flower are dying off and supplies are limited.

For the current period, FI can only obtain 3,000 ounces of orchid oil. For the production schedule that maximizes profits, how many bottles of Wild Times should be produced?

Orchid Heaven Exotic Whiff Wild Times
Sales price per bottle \$75.00 \$90.00 \$115.00
Variable costs \$52.50 \$54.00 \$57.50
ounces required per bottle 0.10 ounces 0.25 ounces 0.50 ounces
market demand, bottles 10,000 4,000 3,000