Montreal Ltd produces 3 different bicycles which are the simple A, the classic B, and the superb C.

Product Price per unit Variable cost per unit Budgeted units to be sold Machine hours required per unit

Simple A $600 $480 350 Two Hours

Classic B $650 $290 500 Three Hours

Superb C $720 $400 300 Eight Hours

The fixed costs incurred for the production of the three bike models amount to $120,000. The total machine hours available amount to 3,800 hours.

Required: A. Calculate the maximum profit achievable from full capacity production at Montreal Ltd.

B. Montreal Ltd has the option to rent additional machinery to make sure that all budgeted units can be produced and sold. This would increase fixed costs by an additional $35,000. Would you recommend doing this?