The Mad Hatter Company owns a machine which manufactures two types of chimney ca
ID: 2347264 • Letter: T
Question
The Mad Hatter Company owns a machine which 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?Cap A Cap B
selling price per unit $80 $60
variable costs per unit $53 $42
A. 5,000 units of cap B.
B. 1,000 units of cap A and 4,500 units of cap B.
C. 1,000 units of cap A and 5,000 units of cap B.
D. 10,000 units of cap A.
E. 1,000 units of cap A and 6,000 units of cap B.
Explanation / Answer
The Mad Hatter Company owns a machine which 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?
Cap A Cap B
selling price per unit $80 $60
variable costs per unit $53 $42
A. 5,000 units of cap B.
B. 1,000 units of cap A and 4,500 units of cap B.
C. 1,000 units of cap A and 5,000 units of cap B.
D. 10,000 units of cap A.
E. 1,000 units of cap A and 6,000 units of cap B.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.