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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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Hubert Koch
Hubert KochLv2
28 Sep 2019

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