Watson Corporation Manufactures Two Products,Simple and Complex Total Annual Fixed Costs Are $18,000

question 5

Multiple Choice

Watson Corporation manufactures two products,Simple and Complex.The following annual information was gathered:
$\begin{array}{lll}&\text { Simple }&\text { Complex }\\\text { Selling price per unit } & \$ 47.00 & \$ 26.00 \\\text { Variable cost per unit } & 42.00 & 22.00\end{array}$
Total annual fixed costs are $18,000.Assume demand for either product exceeds the factory's capacity.It takes one hour to make one unit of Complex.However,Simple takes 50% longer to manufacture when compared to Complex.Only 120,000 hours of plant capacity are available.How many units of Simple and Complex should Watson Corporation produce and sell in a year to maximize profits?

• A) an equal number of Simple and Complex
• B) 80,000 units of Simple and 0 units of Complex
• C) 0 units of Simple and 120,000 units of Complex
• D) either Simple or Complex; it does not matter

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