Smash Company has 5000 machine hours available annually to manufacture badminton racquets.The following information is available for the two different racquets produced by Smash: $$\begin{array} { | l | l | }
\hline \text { Pro } & \
\hline \text { Unit sales price } & \$ 300 \
\hline \text { Unit variable costs } & \$ 100 \
\hline \text { Annual demand } & 1900 \text { units } \
\hline \text { Machine time } & 1.25 \text { hours per unit } \
\hline \text { Mid } & \
\hline \text { Unit sales price } & \$ 125 \
\hline \text { Unit variable costs } & \$ 80 \
\hline \text { Annual demand } & 5000 \text { units } \
\hline \text { Machine time } & \text { 4 hours per unit } \
\hline
\end{array}$$ How many units of each racquet should be manufactured for the company to maximize its operating income? (Round your answer to the nearest whole unit.)

Question

Smash Company has 5000 machine hours available annually to manufacture badminton racquets.The following information is available for the two different racquets produced by Smash: $$\begin{array} { | l | l | } 
\hline \text { Pro } & \
\hline \text { Unit sales price } & \$ 300 \
\hline \text { Unit variable costs } & \$ 100 \
\hline \text { Annual demand } & 1900 \text { units } \
\hline \text { Machine time } & 1.25 \text { hours per unit } \
\hline \text { Mid } & \
\hline \text { Unit sales price } & \$ 125 \
\hline \text { Unit variable costs } & \$ 80 \
\hline \text { Annual demand } & 5000 \text { units } \
\hline \text { Machine time } & \text { 4 hours per unit } \
\hline
\end{array}$$ How many units of each racquet should be manufactured for the company to maximize its operating income? (Round your answer to the nearest whole unit.)

Quizplus · Accepted Answer

To maximize operating income, prioritize the product with the highest contribution margin per machine hour. Pro racquets have a contribution margin of $200 and require 1.25 hours, resulting in $160 per hour. Mid racquets have a contribution margin of $45 and require 4 hours, resulting in $11.25 per hour. Produce 1900 Pro racquets (2375 hours) and use the remaining 2625 hours for Mid racquets, producing 656 units.

Smash Company Has 5000 Machine Hours Available Annually to Manufacture