FitTime Inc. manufactures two types of exercise treadmills, regular and deluxe. The workout frenzy is such that FitTime can use all available machine clocks by producing both models. The two models are processes in the same department. Information about the two models is as follows:

PER UNIT
luxury	Organised
Sale price	990 dollars	560 dollars
Costs
Direct materials	290	100
direct workforce	86	188
Variable production load	174	86
Total variable costs	440	275

Total fixed costs are $100,000, all of which are unavoidable. Each luxury model takes 2.5 hours to produce, and each regular model takes 1.5 hours to produce. FitTime has 2,000 machine hours.

Necessary:

1. What is the optimum product mix? What is the expected total CM at this optimum product mix?
2. Suppose the demand for the regular model is limited to 800 units. Demand for the deluxe model is limited to 600 pieces. What is the optimum product mix? What is the expected total CM at this optimum product mix?

Answer rating: 100% (QA)

i Contribution margin per hour Deluxe Regular Selling ... View the full answer