Buzz Appliances manufactures two products: Food Processors and Espresso Machines

Question

Buzz Appliances manufactures two products: Food Processors and Espresso Machines. The following data are available: Food Processors $125 $80 Espresso Makers $225 $190 Sales price Variable costs The company can manufacture two food processors per machine hour and three espresso machines per machine hour. The company's production capacity is 1,600 machine hours per month To maximize profits, what product and how many units should the company produce in a month (assuming unlimited demand for both products)? O A. 3,200 Food Processors and 4,800 Espresso Machines O B. 3,200 Food Processors and 0 Espresso Machines C. 90 Food Processors and 105 Espresso Machines OD. 4,800 Espresso Machines and 0 Food Processors

Explanation / Answer

Calculation of contribution per unit Particulars Food processors Expresso makers Sales price 125 225 Less: Variable cost 80 190 Contribution margin(sales price- variable cost) 45 35 Since contribution margin of food processors is more than expresso makers and we have 1600 machine hours per month so (1600*2)= 3200 food processors must be produced by the company. So correct answer is 3200 Food processors and 0 expresso machines.

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