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Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500
Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 180 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes: Price Less variable costs per unit Material Labor Overhead Contribution margin per unit Fixed costs Manufacturing Marketing and administrative Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit Alpha Delta Total $ 125 $155 2.0 110 180 $3,670 34 36 14 $ 71 $ 7,200 $ 4,200 $11,400 25 2.5 495 500 110 180 Required: a. What is the optimal production schedule for Slavin? In other words, how many Alphas and Deltas should the company produce each month to maximize monthly profit? Alphas Deltas units units b. If Slavin produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule? Increases profits by
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