Healthy Time produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Healthy Time could use all its available machine hours to produce either model. The two models are processed through the same production departments. Data for both models are as follows:

		Per Unit
		Deluxe	Regular
	Sales Price	$1,020	$580
	Costs:
	Direct materials	270	120
	Direct labor	86	180
	Variable manufacturing overhead	234	78
	Fixed manufacturing overhead*	114	38
	Variable operating expenses	113	61
	Total costs	817	477
	Operating income	$203	$103
	*allocated on the basis of machine hours

Requirements:

1. What is the constraint?

2. Which model should Healthy Time produce?

(Hint:

Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.)

3. If Healthy Time should produce both models, compute the mix that will maximize operating income.