Answer the following questions using the information below:
Helmer's Rockers manufactures two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply:
$\begin{array}{lrr}&\text { Standard }&\text { Premium }\
\text { Contribution margin per unit } & \$ 18 & \$ 20 \
\text { Number of machine-hours required } & 3 & 4
\end{array}$
-If there are 600 machine-hours available per week,how many rockers of each model should Jim Helmer produce to maximize profits?
A) 100 units of Standard and 49 units of Premium
B) 72 units of Standard and 70 units of Premium
C) 100 units of Standard and 70 units of Premium
D) 85 units of Standard and 60 units of Premium

Question

Answer the following questions using the information below:
Helmer's Rockers manufactures two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply:
 $\begin{array}{lrr}&\text { Standard }&\text { Premium }\
\text { Contribution margin per unit } & \$ 18 & \$ 20 \
\text { Number of machine-hours required } & 3 & 4
\end{array}$
-If there are 600 machine-hours available per week,how many rockers of each model should Jim Helmer produce to maximize profits?
A) 100 units of Standard and 49 units of Premium
B) 72 units of Standard and 70 units of Premium
C) 100 units of Standard and 70 units of Premium
D) 85 units of Standard and 60 units of Premium

Quizplus · Accepted Answer

The contribution margin per machine-hour is $6 for the Standard Model ($18 contribution margin / 3 machine-hours) and $5 for the Premium Model ($20 contribution margin / 4 machine-hours). Since the contribution margin per machine-hour is higher for the Standard Model, Jim Helmer should produce as many units of the Standard Model as possible, up to the limit of 600 machine-hours. This means producing 100 units of the Standard Model (which requires 300 machine-hours) and 70 units of the Premium Model (which requires 280 machine-hours).

Answer the Following Questions Using the Information Below: Helmer's Rockers

Answer the Following Questions Using the Information Below:
Helmer's Rockers