Question
Ridley Corporation manufactures two styles of lamps--a Bedford Lamp and a Lowell Lamp. The following per unit data are available: Bedford Lamp Lowell Lamp Sales
Ridley Corporation manufactures two styles of lamps--a Bedford Lamp and a Lowell Lamp. The following per unit data are available:
| Bedford Lamp | Lowell Lamp |
Sales price | $25 | $35 |
Variable costs | $17 | $23 |
Machine hours required for one lamp | 2 | 4 |
Total fixed costs are $40,000. Marketing data indicate that the company can sell up to 6,000 units of the Bedford Lamp and up to 6,000 units of the Lowell Lamp. Machine hour capacity is 25,000 hours per year. Which product mix will deliver the optimum operating income?
Select one:
A. 3,000 Bedford Lamps and 1,500 Lowell Lamps
B. 6,000 Bedford Lamps and 3,250 Lowell Lamps
C. 6,000 Bedford Lamps and 6,000 Lowell Lamps
D. 3,000 Bedford Lamps and zero Lowell Lamps
E. none of the above
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