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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 170 units (each) monthly. Slavin is currently producing 115 Alphas and 115 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 $125 $155 Material Labor Overhead 23 14 32 35 $ 71 S 74 Contribution margin per unit Fixed costs Manufacturing $ 7,400 4,400 $11,800 Marketing and administrative Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit 2.0 2.5 495 500 115 170 $4,875 115 170 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 units Deltas 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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