Question

Christine's Chronographs makes two models of a high-end watch-the model 94 and the model 101. Both models go through a special polishing step that requires the use of the single polishing machine at the company. The price and costs of the two models appear as follows. Price per watch Variable cost per watch Polishing hours per watch Model 94 Model 101 $4,900 $10,100 $2,500 $ 6,200 2 3 The polishing machine used for both models has a capacity of 40,800 hours annually. Fixed manufacturing costs are $8,000,000 annually. Required: a. Suppose that the maximum annual unit sales that Christine's can achieve is 16,000 units of the Model 94 and 14,600 of the Model 101. How many units of each watch model should Christine's produce annually? b. Suppose that the maximum annual unit sales that Christine's achieve make is 14,000 units of the Model 94 and 11,000 of the Model 101. How many units of each watch model should Christine's produce annually? Complete this question by entering your answers in the tabs below. Required A Required B Suppose that the maximum annual unit sales that Christine's can achieve is 16,000 units of the Model 94 and 14,600 Model 101. How many units of each watch model should Christine's produce annually? units Model 94 Model 101 units ed Required

Answer 1

Answer Page No 0 Model 94 Contribution mangin - Price per I watch Variable costo kper watch $4900 - $2600 $ 2400 per hour Polishing hours per watch $2400 $1200 Contribution margin contribution margin Model 101 hour 3 Contribution margin = $10,100 – $6200 - $3900 Contribution margin per $3900 $1300 The contribution margin per hour of model 101 higher. therefore, the complete demand for modellos should be satisfied first. Its there are any remaining polish hours available then they should be used for the poodu -ction of model 94 a o unito Model 94 Model 101 13600 units

Page No@ 40800 3 13600 n 6 Model 94 3900 units Mode 101 11000 unila Model 94 & (40800 (3X/1000) 7800 = 3900 Modell 101 33x11000 11000 3