4) Sadie Kitchenware Co. manufactures two products: toaster ovens and bread mach
ID: 2415330 • Letter: 4
Question
4) Sadie Kitchenware Co. manufactures two products: toaster ovens and bread machines. The following data are available:
Toaster Ovens
Bread Machines
Sale price
$80
$150
Variable costs
$40
$70
Sadie Kitchenware Co. can manufacture six toaster ovens per machine hour and four bread machines per machine hour. Sadie Kitchenware Co.’s production capacity is 1,800 machine hours per month, and Sadie Kitchenware Co. can sell as many units of either type as it can produce. What product and how many units should the company produce in a month to maximize profits?
A) 7,200 bread machines
B) 5,400 toaster ovens and 3,600 bread machines
C) 7,200 toaster ovens and 2,400 bread machines
D) 10,800 toaster ovens
Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.
Toaster Ovens
Bread Machines
Sale price
$80
$150
Variable costs
$40
$70
Explanation / Answer
Sadie Kitchenware Co Toaster Ovens Bread Machines Sale price $80 $150 Variable costs $40 $70 Contribution Per Unit $40 $80 Machine Hour Per Unit $6 $ 4.00 Contribution Per Machine Hour Contribtion per unit/Machine hour per unit $7 $20 1.) Manufacture 7200 Bread Machine Total Hours 1800 Contibution Per Machine Hour $36,000 2) Manufacture 5400 toaster oven and 3600 Bread Machine Total Hours 1800 Contribtion Per Machine Hour $ 24,300.00 3) Manufacture 7200 toaster oven and 2400 Bread Machine Total hours 1800 Contribtion per Pachine Hour $ 20,400.00 4) Manfacture 10800 Toaster Oven Total hours 1800 Contribution Per Machine hour $ 12,600.00 For maximize profit company shold produce 7200 Bread Machine
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