Question
Tech Innovations produces standard and advanced laptops. The standard laptop is sold at $700 each, and the advanced laptop is sold at $1,200 each. The
Tech Innovations produces standard and advanced laptops. The standard laptop is sold at $700 each, and the advanced laptop is sold at $1,200 each. The variable cost of making the standard laptop is $500 each. It costs an extra $300 to make the advanced laptop. It takes 30 labor hours to make 100 standard laptops and 45 labor hours to make 100 advanced laptops. There are 3,800 hours of labor time available for production each week. The maximum weekly sales for the standard and advanced laptops are 800 and 300 units, respectively. Fixed production costs total $1,500,000 per year. All selling costs are fixed.
Required: (a) Determine the optimal production level in number of units for each product. (b) Prepare an income statement for the company based on the optimal production level. (c) Calculate the company's tax liability assuming a tax rate of 35%.
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