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Life Master produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Life Master could use all its available machine
Life Master produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Life Master 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: (Click the icon to view the data.) Read the requirements. X Data Table Requirement 1. What is the constraint? Life Master's constraint is Per Unit Deluxe Regular X 1 $ Sales Price Requirements 560 1,050 $ Costs: Direct materials 340 90 Direct labor 82 192 252 84 1. What is the constraint? 2. Which model should Life Master produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) 3. If Life Master should produce both models, compute the mix that will maximize operating income. Variable manufacturing overhead Fixed manufacturing overhead* 108 36 63 121 Variable operating expenses 903 465 Total costs $ 147 $ 95 Print Done Operating income *allocated on the basis of machine hours Print Done
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