Helmer\'s Rockers manufactures two models, Standard and Premium. Weekly demand i
ID: 2487428 • Letter: H
Question
Helmer's Rockers manufactures two models, Standard and Premium. Weekly demand is estimated to be 120 units of the Standard Model and 70 units of the Premium Model.
The following per unit data apply.
Standard Premium
Contribution margin per unit $18 $20
Number of machine-hours required 3 4
If there are 600 machine-hours available per week, how many rockers of each model should Jim Helmer produce to maximize profits?
Answer:
A. 100 units of Standard and 60 units of Premium
B. 120 units of Standard and 60 units of Premium
C.120 units of Standard and 70 units of Premium
D.85 units of Standard and 60 units of Premium
Explanation: Standard (120 units 3mh) + Premium (60 units 4mh) = 600 machine-hours
I know the answer is B, but how did you get the unit?? I mean the Standard has 120 unit, Premium has 70 units and it turns to 60 units?? HOW COME, please explain more detail how to get that 60 units??
Explanation / Answer
Statement of Ranking
Since standard has higher contribution margin per machine hours thus we should produce the maximum units of standard(i.e. 120) by utilizing the maximum possible machine hours and remaining machine hours should be utilised to produce premium.
Hours to be utilized in producing 120 units of Standard = 120 x 3 = 360
Remaining machine hours = 600 - 360 = 240
Units of premium = 240/4 = 60
Thus in order to maximize , we should produce 120 units of standard and 60 units of premium
Thus answer will be B.
Standard Premium Contribution per unit 18 20 No. of machine hours per unit 3 4 Contribution per machine hour 6 5 Ranking I IIRelated Questions
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