Answer the Following Questions Using the Information Below:
Helmer's Rockers

question 87

Multiple Choice

Answer the following questions using the information below:
Helmer's Rockers manufactures two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply:
$\begin{array}{lrr}&\text { Standard }&\text { Premium }\\\text { Contribution margin per unit } & \$ 18 & \$ 20 \\\text { Number of machine-hours required } & 3 & 4\end{array}$
-If there are 496 machine-hours available per week,how many rockers of each model should Jim Helmer produce to maximize profits?

• A) 100 units of Standard and 49 units of Premium
• B) 72 units of Standard and 70 units of Premium
• C) 100 units of Standard and 70 units of Premium
• D) 85 units of Standard and 60 units of Premium

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Definitions:

Cost of Debt

The effective interest rate a company pays on its debts, including bonds, loans, and lines of credit.

Lenders' Return

The profit or interest earned by lenders for providing funds to borrowers, reflecting the compensation for the risk of lending and the time value of money.

Equity Investment

A financial contribution into shares of a company, granting the investor ownership rights and potential profit shares.

WACC

The Weighted Average Cost of Capital, a calculation of a firm's capital cost that weighs each category of capital (equity, debt, etc.) proportionally.