Answer the Following Questions Using the Information Below:
Frank's Furniture

question 87

Multiple Choice

Answer the following questions using the information below:
Frank's Furniture Company manufactures three sizes of lounge chairs: small,medium and large.Product information is provided below.
$\begin{array}{lrrr}&\text { Small}&\text { Medium }&\text { Large }\\\text { Urit selling price } & \$ 150 & \$ 250 & \$ 500 \\\text { Unit costs: } & & & \\\quad \text { Variable manufacturing } & (60) & (120) & (200) \\\quad \text { Fixed manufacturing } & (40) & (50) & (120) \\\quad \text { Variable ælling and administrative } & \underline{30) } & \underline{30) } & \underline{30) } \\\text { Unit profit } & \underline{\$ 20} & \underline{\$ 50} & \underline{\$ 150} \\& & & \\\text { Demand in units } & 100 & 120 & 100 \\\text { Machine-hours per unit } & 20 & 40 & 100\end{array}$
The maximum machine-hours available are 6000 per week.
-Which of the three product models should be produced first if management incorporates a short-run profit maximising strategy?

• A)small chairs
• B)medium chairs
• C)large chairs
• D)either medium or large chairs

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