Natchitoches Company makes lenses used in cataract surgery. There are three types of lenses made, each requiring the use of highly specialized medical equipment with a total operating capacity of 2,000 hours per year. Information about the three lenses follows: Item Lens A Lens B Lens C Selling Price $600 $900 $1,200 Variable Costs 300 400 600 Machine Hours/ Unit 1 hour 2 hours 4 hours Marketing believes they can sell as many of the lenses as they can make, but recognizes the operating capacity of the medical equipment severely constrains potential output.
i. If marketing is right, which single type of lens would produce the highest total profit for the firm?
ii. If they are wrong-they need to select a second lens to fill out their capacity-- which type of lens would be the next most profitable for them to produce?