Short-Tere Le E25-15 Making product mix decisions Tread Mile produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Tread Mile 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: 2.0 Per Unit Deluxe Regular $1,040 $ 570 300 90 78 190 276 92 Sales Price Costs: Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Operating Expenses Total Costs Operating Income *allocated on the basis of machine hours 120 40 115 67 889 479 $ 151 $ 91 Requirements 1. What is the constraint 2. Which model should Tread Mile produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) 3. If Tread Mile should produce both models, compute the mix that will maximize operating income