EXAMPLE 5- UTILIZATION OF CONSTRAINED RESOURCES

Birdie Maker produces two types of golf balls: the pro model and the tour model. The balls are sold to retailers in cartons containing 360 balls (30 boxes containing 4 sleeves per box, with each sleeve holding 3 balls). Both models are made with the same machine. The pro model golf ball takes 30 minutes of machine time to produce 360 balls, whereas the tour ball takes 45 minutes to produce the same number. The difference in production time results mainly from the different materials used in construction. Although weekend golfers purchase both models, professionals on the PGA tour use the tour model.

	Pro Model	Tour Model
Sales price (per carton)	$450	$540
Less: Direct materials	200	265
Direct labor	50	50
Variable overhead	50	75
Contribution margin	$150	$150
Required machine hours	0.5	0.75
Contribution margin per machine hour	$300	$200

If machine time is limited to 300 hours per month, the demand for the pro model is 400 cartons per month, and the demand for the tour model is 150 cartons per month, how much of each product should Birdie Maker produce?