Way Out There Golf Balls, Inc. produces two types of golf balls: the pro model a
ID: 2446703 • Letter: W
Question
Way Out There Golf Balls, Inc. produces two types of golf balls: the pro model and tour model. The golf balls are sold to retailers in cartons containing 360 balls (30 boxes containing 4 sleeves per box, with each sleeve holding 3 balls). Both models are made with the same machines. It takes 15 minutes of machine time to produce 360 pro model golf balls, whereas it takes 30 minutes to produce the same number of tour model balls. The difference in production time results mainly from the different materials used in construction. If the total machine time available is 110 hours per month and the demand for each model of golf ball is 108,000 per month how many of each model should be produced to maximize profit? The relevant data concerning the two models are as follow:
Description
Pro Model
Tour Model
Sales Price (per carton)
$500
$590
Less: Direct Materials
200
265
Direct Labor
50
50
Variable Overhead
50
75
Contribution Margin
$200
$200
Required Machine Time
¼ hour
½ hour
a. 300 Cartons of Pro Model & 75 Cartons of Tour Model
b. 305 Cartons of Pro Model & 70 Cartons of Tour Model
c. 375 Cartons of Pro Model & 70 Cartons of Tour Model
d. 300 Cartons of Pro Model & 70 Cartons of Tour Model
Description
Pro Model
Tour Model
Sales Price (per carton)
$500
$590
Less: Direct Materials
200
265
Direct Labor
50
50
Variable Overhead
50
75
Contribution Margin
$200
$200
Required Machine Time
¼ hour
½ hour
Explanation / Answer
Option D : 300 Cartons of Pro Model & 70 Cartons of Tour Model
Because it is not Possible to manufracture balls as per other options
Profit = 300*200 + 70*200 = $74000
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