Question 11 (8 points)

Classic Car Model Company makes miniature models of classic cars. Each miniature car requires several coats of paint. A total of 40,000 hours of painting time is available per year.

Data concerning the company's three products appear below:

	Edsel	Reo	Triumph
Selling Price per Unit	$270	$260	$230
Variable Direct Labour per unit	$120	$75	$65
Variable Direct Materials per unit	$75	$99	$71
Variable Overhead per unit	$25	$25	$17
Fixed Overhead per unit	$50	$65	$50
Variable Marketing per unit	$10	$11	$12
Hours of painting time per unit	10	6	6
Annual Demand (in Units)	3,100	2,100	1,800

Required:

1. How many hours of Painting Time would be required to satisfy demand for all products?
2. What is the optimal production plan for the year (how many of each type of car should be made)?
3. If a company saleswoman got a commission based on revenue, and she was promoting (encouraging the customer to buy) one specific type of model, which one would she promote, and why? (Be brief, and 'to the point'.)
4. Would the company be happy that the saleswoman is promoting the product that you chose in req't 3, instead of another product? Be brief.
5. Identify one thing managers could do to deal with the constraint in the painting department? Be brief, but 'to the point'. (Be specific with amounts as well.)