Question

W on Hep Buzz Appliances manufactures two products: Food Processors and Espresso Machines. The following data are available: Food Processors Espresso Makers Sales price $155 $255 Variable costs $60 $190 The company can manufacture either two food processors per machine hour or three espresso machines per machine hour. The company's production capacity is 1.500 machine hours per month To maximize profits, what product and how many units should the company produce in a month (assuming unlimited demand for both products/ OA 3,000 Food Processors and 4.500 Espresso Machines OB. 3,000 Food Processors and Espresso Machines C. 4.500 Espresso Machines and Food Processors OD 100 Food Processors and 195 Espresso Machines

Answer 1

Food Processors Espresso makers 2 Sales price $ 155$ 255 3 Variable costs $ 60 $ 190 4 Contribution margin $ 95 $ 65 5 Machine hours required per machine 0.5 0.333 6 Contribution marhine per machine hour $ 190 $ 195 7 Ranking 8 9 As there is unlimited demand, we produce nly Espresso machine because it 10 has the highest contribution margin per hour. 11 12 Total Espresso machines to be produced = 1,500 machine hours *3 = 4,500 Espresso machines. 13 14 Hence, the correct option is C. 4,500 Espresso Machines and Food processors. 15

Food Processors Espresso makers 2 Sales price 155 255 3 Variable costs 60 190 4 Contribution margin =+B2-B3 =+C2-C3 5 Machine hours required per machine =1/2 =1/3 6 Contribution marhine per machine hour =+B4/B5 =+C4/C5 7 Ranking