Tomball Co. manufactures two chair models, Standard and Premium. Weekly demand is estimated to be 150 units of the Standard Model, 100 units of the Premium Model, and 75 units of the Deluxe Model. Only 650 machine hours are available per week. The following per unit data apply: Standard Premium Deluxe Maximum demand (in units) 150 100 75 Current production (in units) 100 50 50 Contribution margin per unit $16 $24 $35 Number of machine hours required 4 5 Required: Please answer all the following questions, and show your works and computations to get full credits. 1. What is the contribution margin per machine hour for each model? b. What is the total contribution margin at the current level of production for each model? c. Given maximum capacity of 650 machine hours, how many machine hours would you recommend of each model to maximize weekly production profits? How many units of each model? d. If there is no limit for machine hours available per week (instead of only 650 machine hour per week), how many chairs of each model should Katy produce to maximize profits?
Tomball Co. manufactures two chair models, Standard and Premium. Weekly demand is estimated to be 150 units of the Standard Model, 100 units of the Premium Model, and 75 units of the Deluxe Model. Only 650 machine hours are available per week. The following per unit data apply: Standard Premium Deluxe Maximum demand (in units) 150 100 75 Current production (in units) 100 50 50 Contribution margin per unit $16 $24 $35 Number of machine hours required 4 5 Required: Please answer all the following questions, and show your works and computations to get full credits. 1. What is the contribution margin per machine hour for each model? b. What is the total contribution margin at the current level of production for each model? c. Given maximum capacity of 650 machine hours, how many machine hours would you recommend of each model to maximize weekly production profits? How many units of each model? d. If there is no limit for machine hours available per week (instead of only 650 machine hour per week), how many chairs of each model should Katy produce to maximize profits?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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answer part 4 only
i have attached the answers to parts 1-2
Transcribed Image Text:Step 2
Standard
Premium
Deluxe
Contribution margin per unit (A)
Machine hours required (B)
Contribution margin per machine hour (A/B)
16
24
35
4
5
6
Standard
Premium
Deluxe
Contribution margin per unit (A)
Number of units (B)
Total Contribution Margin (A*B)
16
24
35
100
1600
50
50
1200
1750
Step 3
First machine hours should be applied for Standard product, since it has maximum contribution margin per
machine hour
Machine hours required for Standard = 150*2 = 300 machine hours
Balance machine hours = 650 - 300 = 350 machine hours
Then Deluxe product should be produced,
Number of units that can be produced with 350 hours = 350/7 = 50 units
So, 150 units of Standard and 50 units of Deluxe should be produced.
2/8
Transcribed Image Text:Tomball Co. manufactures two chair models, Standard and Premium. Weekly demand is
estimated to be 150 units of the Standard Model, 100 units of the Premium Model, and 75 units
of the Deluxe Model. Only 650 machine hours are available per week. The following per unit
data apply:
Standard
Premium
Deluxe
Maximum demand (in units)
150
100
75
Current production (in units)
100
50
50
Contribution margin per unit
$16
$24
$35
Number of machine hours required
2
4
5
Required: Please answer all the following questions, and show your works and computations to get full credits.
1. What is the contribution margin per machine hour for each model?
b. What is the total contribution margin at the current level of production for each model?
c. Given maximum capacity of 650 machine hours, how many machine hours would you recommend of each model to maximize weekly production profits? How many units of each model?
d. If there is no limit for machine hours available per week (instead of only 650 machine hour per week), how many chairs of each model should Katy produce to maximize profits?
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