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Layton Machining Company (LMC) manufactures two versions of a basic machine tool. One version is a standard model and one is a custom madel, which
Layton Machining Company (LMC) manufactures two versions of a basic machine tool. One version is a standard model and one is a custom madel, which requires some additional work and slightly higher-grade materials. The manufacturing process at LMC requires that each product go through two departments, Grinding and Finishing. The process in each department uses a single type of machine. Total machine capacity in Grinding is 86,000 hours, and in Finishing, total machine capacity is 66.500 hours. Each department has multiple machines) Total market demand is limited to 172.000 standard units and 192,000 custom units monthly. LMC is currently producing 162,000 standard units and 125,000 custom units each month. Cost and machine-usage data for the two products follow: Standard S 9.30 Custom $ 11.30 Total Price Less variable costs per unit Material Labor Overhead Cantribution margin per unit Fixed costs Manufacturing Marcating and administrative 2.70 3.00 2.45 3.45 2.40 $ $ 95,000 56.000 $ 151.000 Grinding machino hours per unit Finishing machine hours per unit Grinding machine hours used Grinding machine hours available Finishing machine hours used Finishing machine hours available Quantity produced Maximum demand Profit 69,900 88.000 66.200 66,500 162.000 172.000 S458.900 125,000 192,000 Required: a. What is the optimal production schedule for LMC? In other words, how many standard unils and custom units should the company produce each month to maximize monthly profit? Standard unite Custom units b. If LMC produces at the level found in requirement (a). how much will monthly profit increase over the current production schedule? profits by
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