Question: Question 3 - Constrained Resource Mac & Nac manufactures two types of women's handbags: a handbag that can be worn cross-body (model A), and an

 Question 3 - Constrained Resource Mac & Nac manufactures two types

Question 3 - Constrained Resource Mac & Nac manufactures two types of women's handbags: a handbag that can be worn cross-body (model A), and an over-the-shoulder handbag (model B). Cost and revenue data for each model is shown below: Model A Model B Selling price per unit $80 $100 Variable cost per unit $56 $50 The plant that makes these handbags is operating at capacity. The company is currently using all of the available sewing machine hours which is 10,000 hours per month. Model B requires 2 hours of sewing machine time (there's more pockets and zippers on this model) while Model A requires 0.8 hours of sewing machine time. Demand is 4,000 and 4,500 units for Model A and Model B respectively. Required: a. Which model should the company focus on given the constraint with machine hours? Use calculations to support your answer. b. The company has determined that a minimum of 2,500 units should be made of each model. Calculate the total number of units of each model to produce

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!