Sales revenue Fled expenses Operating income (oss) 85,000 $44,000 $12,000 $29,00

Question

Sales revenue Fled expenses Operating income (oss) 85,000 $44,000 $12,000 $29,000 45,000$ 20,000 25,000$12,000 $15,000 $5,000 $(9.000 $17,000 O A. Decrease $12.000 B. Increase $12,000 ° C. Increase S37.000 O D. Increase $34.000 Lie Around Fumiture manufactures two products Couches and Beds. The folowing data are available Sales price Variable costs Couches Beds $540.00 $710.00 $35000 $41500 The company can To maximize profts, what product and how many units should the company produce in a month manufacture 3 couches per machine hour and 2 bed per machine hour The company's production capacity is 9 900 machine hours per month. OA. 19.800 beds O B. 29.700 couches O C. 29.700 couches and 19B00 beds O D. 19.800 couches and 29 700 beds

Explanation / Answer

1) Effect on net income contribution lost of F (20000-12000)= -8,000 contribution on E       (45,000-25,000)= 20,000 Net increase in income 12,000 option b ) increase $12,000 2) Couches Beds Sales price 540 710 variable costs 350 415 contribution margin per unit 190 295 Machine hours per unit 0.333333 0.5 contribution margin per hour 570 590 hence it should produce beds it produces 2 beds in 1 machine hour hence in 9,900 hours it will produce 9900*2= 19800 beds option a) 19,800 Beds

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