Lifemaster produces 2 types of treadmills-regular anddeluxe. The exercise craze is such that L.T. could use all it'savailable machine hours to produce either model. The 2 models areproduced through the same production departments. Data for bothmodels are as follows:
Per Unit
Deluxe Regular
Sales Price
Costs
Direct Materials
Direct Labor
Variable Manufacturing Overhead
Fixed Manufacturing Overhead
Variable Operating Expenses
Total Costs
Operating Income
*Allocated on the basis of machine hours. 1. What is theconstraint? 2. Which model should they produce? (Hint:Use theallocation of fixed manufacturing overhead to determine theproportion of machine hours used by each product). CM per MHrRegular-$387 3. If they produce both models, compute the mix thatwill maximize operating income.
Lifemaster produces 2 types of treadmills-regular anddeluxe. The exercise craze is such that L.T. could use all it'savailable machine hours to produce either model. The 2 models areproduced through the same production departments. Data for bothmodels are as follows:
Per Unit
Deluxe Regular
Sales Price
Costs
Direct Materials
Direct Labor
Variable Manufacturing Overhead
Fixed Manufacturing Overhead
Variable Operating Expenses
Total Costs
Operating Income
*Allocated on the basis of machine hours. 1. What is theconstraint? 2. Which model should they produce? (Hint:Use theallocation of fixed manufacturing overhead to determine theproportion of machine hours used by each product). CM per MHrRegular-$387 3. If they produce both models, compute the mix thatwill maximize operating income.
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