Question
AC Inc. manufactures two models of air compressors: 6 gallon and 12 gallon. The following per unit data apply: Per Unit 6 Gallon 12 Gallon
AC Inc. manufactures two models of air compressors: 6 gallon and 12 gallon. The following per unit data apply:
Per Unit | 6 Gallon | 12 Gallon |
Selling Price | $ 150 | $ 300 |
Variable Costs | $ 80 | $ 204 |
Allocated Fixed Costs | $ 20 | $ 35 |
Number of Machine Hours Needed | 4 hrs. | 6 hrs. |
AC Inc. is limited to 1,160 machine hours of capacity for the production of air compressors. Demand is 200 units of the 6 gallon compressor and 100 units of the 12 gallon compressor. How many units of 6 gallon and 12 gallon compressors respectively should AC Inc. produce to maximize profits?
Multiple Choice
A. 200 and 100
B. 200 and 60
C. 140 and 100
D. 145 and 96
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