Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 150 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products is shown in the following spreadsheet, which Slavin managers use for planning purposes:

Required
a. What is the optimal production schedule for Slavin? In other words, how many Alphas and Deltas should the company produce each month to maximize monthly profit?
b. If Slavin produces at the level found in (a), how much will monthly profit increase over the current productionschedule?

Transcribed Image Text:

D E Alpha Delta 2 Price 3 Leaa variable costs per unit 4 Material 5 Labor 6 Overhead 7 Contribution margin per unit60 $120 $ 150 20 26 14 35 37 14 S 64 9 Fixed costs Total 10 Manufacturing S 8,000 11 Marketing and adminictrative 12 13 Machine houre per unit 14 15 16 Machine hours used 17 Machine hours available 18 $ 13,000 2.0 2.5 495 500 19 Quantity produced 20 Maximum demand 21 Profit 110 150 $ 640 110 150