Mountaineer Products
Mountaineer Products Manufactures Two Types of Tents: Single-Wall

question 31

Multiple Choice

Mountaineer Products
Mountaineer Products manufactures two types of tents: single-wall and double-wall. Selected data related to each type of tent is as follows:
$\begin{array}{lrr}&\text { Single-wall}&\text { Double-wall }\\\text { Sales price } & \$ 250 & \$ 375 \\\text { Direct materials } & 25 & 50 \\\text { Direct labour } & 20 & 40 \\\text { Variable overhead } & 10 & 15 \\\text { Machine hours } & 2 & 3\end{array}$
Total fixed overhead is $150 000. Most of the manufacturing process is done on specialised machines. For the upcoming year, there is a maximum of 9000 machine hours available. Management believes there is sufficient demand for 3000 single-wall and 4000 double-wall tents each year.
-In order to maximise profits,how many of each type of tent should be produced?

• A) Single-wall: 3000 Double-wall: 1000
• B) Single-wall: 0 Double-wall: 3000
• C) Single-wall: 1800 Double-wall: 1800
• D) Single-wall: 1500 Double-wall: 4000

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Definitions:

Long Run

The long run is a period in economics in which all factors of production and costs are variable, allowing for full adjustment to change.

Unemployment

Unemployment refers to the situation when individuals who are able and willing to work are not able to find employment.

Price Level

The mean of present prices for all goods and services produced within the economy.

Phillips Curve

An economic theory that proposes an inverse relationship between the rate of unemployment and the rate of inflation in an economy.