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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
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? O 25,000 units of Model A; 65,000 units of Model B; and 30,000 units of Model C O 13,333 units of Model A; 32,500 units of Model B; and 43,750 units of Model C O 25,000 units of Model A; 0 units of Model B; and 33,000 units of Model C O 13,333 units of Model A; 65,000 units of Model B; and 35,000 units of Model 5 pts O None of the above
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