Question
Company Ltd. manufactures two types of women's wallets: Model 1 and Model 2. Cost and revenue data for each model is shown below: Model 1
Company Ltd. manufactures two types of women's wallets: Model 1 and Model 2. Cost and revenue data for each model is shown below: | |||
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| Model 1 | Model 2 |
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Selling price per unit | 50 | 70 |
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Variable cost per unit | 35 | 40 |
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The plant that makes these wallets is operating at capacity. The company is currently using all the available sewing machine hours which is 15,000 hours per month. Model 1 requires 1.5 hours of sewing machine time (there's more pockets and zippers on this model) while Model 2 requires 2.5 hours of sewing machine time. Required a) Which model should the company focus on given the constraint with machine hours? Use calculations to support your answer. b) The company has determined that a minimum of 3,000 units should be made of each model. Calculate the total number of units of each model to produce. |
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