Question

#23

Lie Around Furniture manufactures two products: Couches and Beds. The following data are available: Couches Beds Sales price $550.00 $750.00 Variable costs $350.00 $395.00 The company can manufacture either 3 couches per machine hour or 2 bed(s) per machine hour. The company's production capacity is 5,200 machine hours per month To maximize profits, what product and how many units should the company produce in a month? O A. 15,600 couches OB. 10,400 couches and 15,600 beds O C. 10,400 beds OD. 15,600 couches and 10,400 beds

Answer 1

Only 5200 Machine Hours are Available Couches Beds Selling Price 550.00 Less : Varaible Cost 350.00 Contribution Margin per Unit 200.00 Machine Time Reqired 0.33 750.00 395.00 355.00 0.50 710.00 First Contribution Margin per Machine 600.00 Hour =(200/0.33, 355/0.50) Order in which prodcuts should be produced Second MH Allocated (5200 Hours) 5200 Units Prodcued 15600 Answer C) 10,400 Beds 5200 10400