Aylmer Consumer Products (ACP) manufactures a broad line of consumer kitchen products, including utensils, bowls, pots, baking sheets, and cutting boards. ACP has a separate division that produces and sells electric can openers. There are two models: the Custom model and the Supreme model. The cost characteristics of the two models are as follows: 

Each Custom model requires 0.20 labor hours, and each Supreme model requires 0.25 labor hours. The planned number of unit sales will result in ACP using all the labor hours it has available for this division. There is no possibility of adding additional labor hours. 

The fixed manufacturing cost in this division is $500,000, and fixed general selling and administrative expenses in this division are $300,000. 

Required 

(a) What is ACP’s projected operating income? 

(b)What is the breakeven number of sales of each product at this product mix? 

(c) Given the labor hours constraint, what is the production plan in unit sales for each product that maximizes income for the upcoming period? 

(d) An outside supplier has offered to supply as many of the Custom model to ACP that ACP would require. If ACP accepts this offer, it will acquire enough of the Custom model from the supplier so that it can sell the maximum demand in unit sales for both products. How many units would ACP purchase, and what is the ceiling (maximum) price that ACP should be willing to pay the outside supplier per unit of the Custom model supplied? 

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Selling price per unit... Planned number of unit sales. The maximum demand in unit sales. Direct materials cost per unit.... Direct labor cost per unit... Variable manufacturing cost per unit CUSTOM MODEL $30.00 36,000 42,000 $ 9.00 $ 5.60 $ 2.00 SUPREME MODEL $36.00 30,000 36,000 $12.00 $7.00 $ 2.50