Cerise Hamilton was having a conversation with her neighbor, a production supervisor for Avco Corporation, a metal products company. Avco’s metal turning department has 90,000 machine hours to manufacture two products: $109 and T678. The following data are available:

S109 T678 Unit contribution margin . $8 $6 Machine hours per unit 5 hours 3 hours Maximum monthly sales 15,000 units 10,000 units Required Assume Cerise Hamilton’s role in discussing the following issues with her neighbor.

a. Does Avco have sufficient machine time to fill all sales orders?

b. Should Avco focus on the manufacture of $109 or T678?

c. Set a production schedule for Avco that makes the most profitable use of its manufacturing time