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Lifemaster produces two types of exercise treadmills: regularand deluxe. The
exercise craze is such that Lifemaster could use all its availablemachine hours to
produce either model. The two models are processed through the sameproduction
departments. Data for both models is as follows:
Per Unit
Deluxe Regular
Sale Price $ 1,020 $560
Costs:
Direct Material 300 90
Direct Labor 88 188
Variable Manufacturing Overhead 264 88
Fixed Manufacturing Overhead* 138 46
Variable Operating Expenses 111 65
Total Costs 901 477
Operating Income $ 119 $ 83
*allocated on the basis of machine hours
Requirements
1. What is the constraint?
2. Which model should Lifemaster produce? (Hint: Use the allocationof fixed
manufacturing overhead to determine the proportion of machine hoursused by
each product.)
3. If Lifemaster should produce both models, compute themix that will maximize the operating income

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Jamar Ferry
Jamar FerryLv2
28 Sep 2019

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