Clay Corporation Manufactures Two Styles of Lamps-A Bedford Lamp and a Lowell

question 84

Multiple Choice

Clay Corporation manufactures two styles of lamps-a Bedford Lamp and a Lowell Lamp. The following per unit data are available:
$\begin{array}{|l|r|r|}\hline&\text { Bedford Lamp } &\text { Lowell Lamp }\\\hline \text { Sale price } & \$ 25 & \$ 35 \\\hline \text { Variable costs } & \$ 17 & \$ 23 \\\hline \text { Machine hours required for 1 lamp } & 2 & 4 \\\hline\end{array}$


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Total fixed costs are $30,000. Machine hour capacity is 25,000 hours per year. Assuming that the company can sell as many products as it can make, which product mix would deliver the highest operating income?

• A) 10,00 Bedford lamps, 1,250 Lowell lamps
• B) Zero Bedford lamps, 6,250 Lowell lamps
• C) 12,500 Bedford lamps, zero Lowell lamps
• D) 12,500 Bedford lamps, 12,500 Lowell lamps

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Definitions:

Interval Variable

A type of quantitative variable that exhibits ordered relationships with meaningful, equal distances between measurements but no true zero point.

Nominal Variable

A nominal variable is a type of categorical variable for which there is no natural ordering among the categories.

Nominal Data

Data categorized into discrete groups or categories without any natural order or ranking among them, such as gender or race.

Nominal Random Variable

A type of random variable that categorizes data without a natural order or ranking among the categories.