Question

Pappy's Toys makes two models of a metal toy-Standard and DeLuxe. Both models are produced on a single machine. The price and costs of the two models appear as follows. Price per unit Variable cost per unit Machine hours per unit Standard DeLuxe $ 60 $ 80 $ 28 $ 32 0.5 1.5 The one machine that used to produce both models has a capacity of 94,000 machine-hours per quarter. Fixed manufacturing costs per quarter are $820,000. Required: a. Suppose that the maximum unit sales in a quarter that Pappy's can achieve is 208,000 units of each product. How many units of each model should Pappy's produce in a quarter? b. Suppose that the maximum unit sales in a quarter that Pappy's can achieve Is 122,000 units of each product. How many units of each model should Pappy's produce in a quarter? Complete this question by entering your answers in the tabs below. Required A Required B Suppose that the maximum unit sales in a quarter that Pappy's can achieve is 208,000 units of each product. How many units of each model should Pappy's produce in a quarter? Standard Model units DeLuxe Model P unts Required A Required B

Answer 1

1) Contribution margin per hour

	Standard	Deluxe
selling price	60	80
Variable cost	28	32
Contribution margin	32	48
Hour per unit	0.50	1.50
Contribution margin per hour	64	32

Optimum product mix

	Hour	Unit
Standard	94000/.50 = 188000	188000
Deluxe	0	0
Total	94000

2) Contribution margin per hour

	Standard	Deluxe
selling price	60	80
Variable cost	28	32
Contribution margin	32	48
Hour per unit	0.50	1.50
Contribution margin per hour	64	32

Optimum product mix

	Hour	Unit
Standard	122000*.50 = 61000	122000
Deluxe	33000	33000/1.5 = 22000
Total	94000