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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 hours.

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 $ 125 $ 155
Less variable costs per unit
Material 20 34
Labor 25 36
Overhead 14 14
Contribution margin per unit $ 66 $ 71
Fixed costs
Manufacturing $ 7,200
Marketing and administrative $ 4,200
$ 11,400
Machine hours per unit 2.0 2.5
Machine hours used 495
Machine hours available 500
Quantity produced 110 110
Maximum demand 180 180
Profit $ 3,670

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?

b. If Slavin produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?

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