Layton Machining Company (LMC) manufactures two versions of a basic machine tool. One version is a standard model and one is a custom model, which requires some additional work and slightly higher-grade materials. The manufacturing process at LMC requires that each product go through two departments, Grinding and Finishing. The process in each department uses a single type of machine. Total machine capacity in Grinding is 50,000 hours, and in Finishing, total machine capacity is 30,000 hours. (Each department has multiple machines.) Total market demand is limited to 100,000 standard units and 120,000 custom units monthly. LMC is currently producing 90,000 standard units and 50,000 custom units each month. Cost and machine-usage data for the two products follow:

Required
a. What is the optimal production schedule for LMC? In other words, how many standard units and custom units should the company produce each month to maximize monthly profit?
b. If LMC produces at the level found in requirement (a), how much will monthly profit increase over the current productionschedule?

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D E Standard Custom 2 Price 3 Less variable costa per unit 4 Material 5 Labor 6 Overhead 7 Contribution margin per unit 8 9Fixed costa 10 Manufacturing 11 Marketing and administrative 12 13 14 Grinding machine hours per unit 15 Finishing machine hours per unit 16 Grinding machine hours used 17 Grinding machine houre available 18 Finiching machine hours used S 6.00 S 8.00 1.50 1.25 1.75 2.00 1.50 2.50 Total s 76,000 37.000 $113,000 0.2 0.1 0.3 0.4 33,000 50,000 29,000 30,000 19 Finiahing machine houre available 20 21 Quantity produced 22 Maximum demand 23 Profit 90,000 100,000 S 122,000 50,000 120,000