Question
The Mad Hatter Company owns a machine that manufactures two types of chimney caps. Production time is 0.20 hours for cap A and 0.40 hours
The Mad Hatter Company owns a machine that manufactures two types of chimney caps. Production time is 0.20 hours for cap A and 0.40 hours for cap B. The machine's capacity is 2,000 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 1,000 units of cap A and 6,000 units of cap B. Selling prices and variable costs per unit are shown below. Based on this information, what is Mad Hatter's most profitable sales mix?
Cap A | Cap B | |
---|---|---|
Selling price per unit | $ 80 | $ 60 |
Variable costs per unit | 53 | 42 |
a.10,000 units of cap A.
b.5,000 units of cap B.
c.1,000 units of cap A and 5,000 units of cap B.
d.1,000 units of cap A and 6,000 units of cap B.
e.1,000 units of cap A and 4,500 units of cap B.
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