A Manufacturer Produces Two Models of Bicycles The Total Times Available for Assembling, Painting, and Packing Are

question 82

Multiple Choice

A manufacturer produces two models of bicycles. The times (in hours) required for assembling, painting, and packaging each model are shown in the table. $\begin{array} { l l l } \text { Process } & \text { Model A } & \text { Model B } \\\text { Assembling } & 2 & 2.5 \\\text { Painting } & 4 & 1 \\\text { Packaging } & 1 & 0.75\end{array}$ The total times available for assembling, painting, and packing are 4000 hours, 4800 hours, and 1500 hours, respectively. The profit per unit are $50 for model A and $75 for model B. What is the optimal production level for each model? What is the optimal profit?

• A)The optimal profit of $120,000 occurs when no units of model A and 1600 units of of model B are produced.
• B)The optimal profit of $112,000 occurs when no units of model A and 1000 units of of model B are produced.
• C)The optimal profit of $97,500 occurs when no units of model A and 600 units of of model B are produced.
• D)The optimal profit of $60,000 occurs when no units of model A and 0 units of of model B are produced.
• E)The optimal profit of $112,000 occurs when no units of model A and 750 units of of model B are produced.

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Definitions:

Tax Purposes

The reasonings or rationalizations related to the computation and payment of taxes, often guiding how financial transactions are structured or reported.

LIFO

Last-In, First-Out, an inventory valuation method where the most recently produced items are recorded as sold first.

Cost Flow Assumption

Accounting methods that companies use to assign costs to inventory and cost of goods sold, such as FIFO, LIFO, and weighted average cost.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.