The Mad Hatter Company owns a machine that manufactures two types of chimney caps. Production time is .20 hours for cap A and .40 hours for cap B. The machine's capacity is 2,000 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 1,000 units of cap A and 6,000 units of cap B. Selling prices and variable costs per unit are shown below. Based on this information, what is the Mad Hatter's most profitable sales mix? $$\begin{array} { | l | c | c | }
\hline & \text { Cap A } & \text { Cap B } \
\hline \text { Selling price per unit } & \$ 80 & \$ 60 \
\hline \text { Variable costsper unit } & 53 & 42 \
\hline
\end{array}$$
A) 10,000 units of cap A.
B) 5,000 units of cap B.
C) 1,000 units of cap A and 5,000 units of cap B.
D) 1,000 units of cap A and 6,000 units of cap B.
E) 1,000 units of cap A and 4,500 units of cap B.

Question

The Mad Hatter Company owns a machine that manufactures two types of chimney caps. Production time is .20 hours for cap A and .40 hours for cap B. The machine's capacity is 2,000 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 1,000 units of cap A and 6,000 units of cap B. Selling prices and variable costs per unit are shown below. Based on this information, what is the Mad Hatter's most profitable sales mix? $$\begin{array} { | l | c | c | } 
\hline & \text { Cap A } & \text { Cap B } \
\hline \text { Selling price per unit } & \$ 80 & \$ 60 \
\hline \text { Variable costsper unit } & 53 & 42 \
\hline
\end{array}$$
A) 10,000 units of cap A.
B) 5,000 units of cap B.
C) 1,000 units of cap A and 5,000 units of cap B.
D) 1,000 units of cap A and 6,000 units of cap B.
E) 1,000 units of cap A and 4,500 units of cap B.

Quizplus · Accepted Answer

The Answer of The Mad Hatter Company owns a machine that manufactures two types of chimney caps. Production time is .20 hours for cap A and .40 hours for cap B. The machine's capacity is 2,000 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 1,000 units of cap A and 6,000 units of cap B. Selling prices and variable costs per unit are shown below. Based on this information, what is the Mad Hatter's most profitable sales mix? $$\begin{array} { | l | c | c | } 
\hline & \text { Cap A } & \text { Cap B } \
\hline \text { Selling price per unit } & \$ 80 & \$ 60 \
\hline \text { Variable costsper unit } & 53 & 42 \
\hline
\end{array}$$
A) 10,000 units of cap A.
B) 5,000 units of cap B.
C) 1,000 units of cap A and 5,000 units of cap B.
D) 1,000 units of cap A and 6,000 units of cap B.
E) 1,000 units of cap A and 4,500 units of cap B.

The Mad Hatter Company Owns a Machine That Manufactures Two