Answer:
a) it will do 210,000 units of standard
b) 127,500 units of standard
19,000 units of deluxe
Explanation:
Standard Deluxe
Sales 115 135
Variable Cost 50 54
CM 165 189
Constrain resource 0.5 1.5
(machine hours)
CM per constrain 330.00 126.00
a)
As the company can use up to 105,000 machine hours It will use as much as it can in doing Standard model which yield a better contribution of the constrain resource.
105,000 machine hours available / 0.5 hours per standard unit = 210,000 units
As there are 230,000 untis available for Standard we can use the entire capacity for standard and achieve the maximum contribution
b) as there isn't enough demand for standard the compay will do the 127,500 and the rest fill it with deluxe:
105,000 hours - 127,500 x 0.5 = 28,500 hours for deluxe
28,500 / 1.5 hours per unt = 19,000 units for deluxe
