Question

Question 29 (2 points) ✓ Saved The Kitchen Company makes toaster ovens and bread machines. Toaster ovens Sales price per unit: $60 Variable costs per unit: $32 Machine hours required per unit: 1 hr Bread machines Sales price per unit: $135 Variable costs per unit: $95 Machine hours required per unit: 2 hrs Machine hours is the limited resource. The company's production capacity is 15,000 machine hours. To maximize profits, the Kitchen Company should produce 15,000 toaster ovens 7,500 bread machines 7,500 toaster ovens and 3,750 bread machines 10,000 toaster ovens and 2,500 bread machines

Answer 1

	Toaster ovens	Bread machines
Selling price per unit	60	135
Variable cost per unit	32	95
Contribution margin per unit (a)	28	40
Machine hours per unit (b)	1	2
Contribution margin per machine hours (a/b)	$ 28	$ 20

Since machine hours are limited, hence machine hours should be used in the production of Toaster ovens since contribution margin per machine hour is higher for Toaster oven production of Toaster ovens

Production of Toaster ovens = Machine hours available/ Machine hour per unit of Toaster oven

= 15,000/1

= 15,000

First option is correct option.

Kindly comment if you need further assistance. Thanks‼!