Kitchen Appliances Company manufactures two products: toaster ovens and bread machines.The following data are available: $$\begin{array} { | l | r | r | }
\hline & \text { Toaster Ovens } & \text { Bread Machines } \
\hline \text { Sales price } & \$ 100 & \$ 200 \
\hline \text { Variable costs } & \$ 30 & \$ 150 \
\hline
\end{array}$$ The company can manufacture three toaster ovens per machine hour and two bread machines per machine hour.The company's production capacity is 1,200 machine hours per month.
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To maximize profits,what product and how many units should the company produce in a month?

Question

Kitchen Appliances Company manufactures two products: toaster ovens and bread machines.The following data are available: $$\begin{array} { | l | r | r | } 
\hline & \text { Toaster Ovens } & \text { Bread Machines } \
\hline \text { Sales price } & \$ 100 & \$ 200 \
\hline \text { Variable costs } & \$ 30 & \$ 150 \
\hline
\end{array}$$ The company can manufacture three toaster ovens per machine hour and two bread machines per machine hour.The company's production capacity is 1,200 machine hours per month.
- 
To maximize profits,what product and how many units should the company produce in a month?

Quizplus · Accepted Answer

The company should produce 2,400 bread machines and 0 toaster ovens to maximize profits. This is because the contribution margin per machine hour is higher for bread machines ($50) than for toaster ovens ($20).

Kitchen Appliances Company Manufactures Two Products: Toaster Ovens and Bread