Smash Company Has 4000 Machine Hours Available Annually to Manufacture

question 84

Multiple Choice

Smash Company has 4000 machine hours available annually to manufacture badminton racquets.The following information is available for the two different racquets produced by Smash: $\begin{array}{|r|r|}\hline \text { Pro } & \\\hline \text { Unit sales price } & \$ 300 \\\hline \text { Unit variable costs } & \$ 150 \\\hline \text { Annual demand } & 1800 \text { units } \\\hline \text { Machine time } & 1.25 \text { hours per unit } \\\hline Mid\\\hline \text { Unit sales price } & \$ 100 \\\hline \text { Unit variable costs } & \$ 70 \\\hline \text { Annual demand } & 5000 \text { units } \\\hline \text { Machine time } & \text { 6 hours per unit }\\\hline\end{array}$ How many units of each racquet should be manufactured for the company to maximize its operating income? (Round your answer to the nearest whole unit.)

• A)1800 units of Pro and 1508 units of Mid
• B)1800 units of Pro and 292 units of Mid
• C)1800 units of Pro and 5000 units of Mid
• D)5000 units of Mid and 292 units of Pro

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Definitions:

Uncertainty

A situation where the outcomes or variables of a situation are unpredictable, often leading to risk in economic and financial decisions.

International Incident

An event that might cause tension or conflict between nations, often involving diplomatic, military, or political issues.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Expected Income Stream

The anticipated series of payments or revenues over a specified period.