Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company must decide on the optimal production decision for its three models of its product for the year. Model A sells for $800 per

image text in transcribed
A company must decide on the optimal production decision for its three models of its product for the year. Model A sells for $800 per unit and has variable costs per unit of $350. Model B sells for $600 per unit and has variable costs per unit of $425. Model C sells for $1,000 and has variable costs per unit of $750. Fixed manufacturing overhead totals $95,000 annually. It takes 3 machine hours to make a unit of Model A, it takes 0.50 machine hours to make a unit of Model B, and it takes 1.25 machine hours to make a unit of Model C. Annual demand for each model is as follows: 25,000 units of Model A, 65,000 units of Model B, and 35,000 units of Model C. There are a total of 116,250 machine hours available to the company during a year. In order to maximize profitability, how many units of each model should the company produce during the year? 25,000 units of Model A; 65,000 units of Model B; and 30,000 units of Model C 13,333 units of Model A;32,500 units of Model B; and 43,750 units of Model C 25,000 units of Model A; O units of Model B; and 33,000 units of Model C 13,333 units of Model A; 65,000 units of Model B; and 35,000 units of Model None of the above A company must decide on the optimal production decision for its three models of its product for the year. Model A sells for $800 per unit and has variable costs per unit of $350. Model B sells for $600 per unit and has variable costs per unit of $425. Model C sells for $1,000 and has variable costs per unit of $750. Fixed manufacturing overhead totals $95,000 annually. It takes 3 machine hours to make a unit of Model A, it takes 0.50 machine hours to make a unit of Model B, and it takes 1.25 machine hours to make a unit of Model C. Annual demand for each model is as follows: 25,000 units of Model A, 65,000 units of Model B, and 35,000 units of Model C. There are a total of 116,250 machine hours available to the company during a year. In order to maximize profitability, how many units of each model should the company produce during the year? 25,000 units of Model A; 65,000 units of Model B; and 30,000 units of Model C 13,333 units of Model A;32,500 units of Model B; and 43,750 units of Model C 25,000 units of Model A; O units of Model B; and 33,000 units of Model C 13,333 units of Model A; 65,000 units of Model B; and 35,000 units of Model None of the above

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

10. Describe the relationship between communication and power.

Answered: 1 week ago