The Mad Hatter Company Owns a Machine That Manufactures Two

question 138

Multiple Choice

The Mad Hatter Company owns a machine that manufactures two types of chimney caps. Production time is .20 hours for cap A and .40 hours for cap B. The machine's capacity is 2,000 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 1,000 units of cap A and 6,000 units of cap B. Selling prices and variable costs per unit are shown below. Based on this information, what is Mad Hatter's most profitable sales mix?

• A) 10,000 units of cap A.
• B) 5,000 units of cap B.
• C) 1,000 units of cap A and 5,000 units of cap B.
• D) 1,000 units of cap A and 6,000 units of cap B.
• E) 1,000 units of cap A and 4,500 units of cap B.

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Definitions:

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