Delfi Company produces two models of seats, Toro and Prep. Information regarding
ID: 2644505 • Letter: D
Question
Delfi Company produces two models of seats, Toro and Prep. Information regarding these products for May follows:
Toro
Prep
Number of units
3,000
7,000
Sales revenue
$120,000
$140,000
Variable costs
60,000
42,000
Fixed costs
24,000
50,000
Net Income
$36,000
$48,000
Pounds of plastic to produce one bucket
4.0
1.6
Contribution margin per unit
$20
$14
Due to increased demand of plastic in the market, Delfi Company can obtain only 9,000 pounds of plastic per month. Delfi can sell as many seats as it can produce of either model. How many of each model should Delfi produce to maximize profit in May considering the constraint?
Question 17 options:
Toro: 0; Prep: 4,375
Toro: 2,250; Prep: 0
Toro: 1,125; Prep: 2,812
Toro: 0; Prep: 5,625
Toro
Prep
Number of units
3,000
7,000
Sales revenue
$120,000
$140,000
Variable costs
60,000
42,000
Fixed costs
24,000
50,000
Net Income
$36,000
$48,000
Pounds of plastic to produce one bucket
4.0
1.6
Contribution margin per unit
$20
$14
Explanation / Answer
Toro Prep
Contribution/unit $20 $14
Pounds used/bucket 4 1.6
Contribution/Ponds used $5 $8.75
(20/4) (14/1.6)
Rank 2
So first produce the Prep= 9000/1.6= 5625 units
So answer is d) Toro-0, Prep- 5625, where profit is maximum
Max. Contribution- 5625*14= $78750
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.