Sierra Sound Systems makes electronic products. Because the employees of one of the company€™s plants are on strike, the Chicago plant is operating at peak capacity. It makes two electronic products: MP3 players and PDAs. Presently, the company can sell as many of each product as can be made, but making a PDA takes twice as long in production labor time as an MP3 player. The company€™s production capacity is 100,000 labor hours per month. Data on each product are as follows:

a. How many of each product should the Chicago plant make? Explain your answer.
b. What qualitative factors would you consider in making this product mixdecision?

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MP3 Players Sales Variable costs Contribution margin Labor hours required Fixed costs are $240,000 per month. $72 (58) S 14 PDAs $108 88) S 20 2