Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 180 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes.
Price | $ | 125 | $ | 155 | |||||
Less variable costs per unit | |||||||||
Material | 20 | 34 | |||||||
Labor | 25 | 36 | |||||||
Overhead | 14 | 14 | |||||||
Contribution margin per unit | $ | 66 | $ | 71 | |||||
Fixed costs | |||||||||
Manufacturing | $ | 7,200 | |||||||
Marketing and administrative | $ | 4,200 | |||||||
$ | 11,400 | ||||||||
Machine hours per unit | 2.0 | 2.5 | |||||||
Machine hours used | 495 | ||||||||
Machine hours available | 500 | ||||||||
Quantity produced | 110 | 110 | |||||||
Maximum demand | 180 | 180 | |||||||
Profit | $ | 3,670 |
Required:
a. What is the optimal production schedule for Slavin? In other words, how many Alphas and Deltas should the company produce each month to maximize monthly profit?
b. If Slavin produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?
Answer is attached below
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Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine....
Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 1 monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage products are shown in the following table, which Slavin managers use for planning purposes. Alpha $ 121 Total Delta $ 151 33 36 Price Less variable costs per unit Material Labor...
Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 170 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes. Total Alpha $ 125 Delta $155 17 32 23...
Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours, Total market demand for the two products is limited to 190 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes. Alpha $ 124 Delta S 154 Total Price Less...
Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 160 units (each) monthly Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes. Total Alpha $ 120 Delta $ 150 Price Less...
Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 160 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes. Alpha Delta Total Price $ 120 $ 150 Less...
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