Sandy Company manufactures three models of office chairs: economy, basic and deluxe.

Product information is provided below.

	Economy	Basic	Deluxe
Unit selling price........................................................	$150	$210	$320
Unit manufacturing costs:..........................................
Variable................................................................	-$40	-$80	-$200
Fixed....................................................................	-$20	-$45	-$70
Unit Variable selling costs...........................................	-$30	-$30	-$30
Net income per unit (computed from amounts above)	$60	$55	$20
Machine-hours per unit...............................................	40 mhrs	40 mhrs	30 mhrs

Fixed manufacturing costs of $30,000 are assigned based on direct labor hours. The costs are unavoidable.

If Sandy has excess capacity, and there is unsatisfied demand for all three products, which model should they produce?

	a.	economy
	b.	basic
	c.	deluxe

AND......

If Sandy only has 6,000 machine hours available after filling all of the existing orders, which model should it produce with the remaining capacity? (Assume unlimited demand again.)

	a.	economy
	b.	basic
	c.	deluxe