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Calculate the total number of machine hours needed

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Question - Outward Rowing Company manufactures canoes and kayaks. Due to an increasing focus on fitness, the company has been experiencing an increased demand for its products. Two of its newer products, which are very popular with water sport enthusiasts, require a waterproofing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 12,000 machine hours, and no other products that the company makes use these machines.

Charlie Green, the company's operations manager, is preparing the production schedule for the coming month and can't seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget.

Mollie Beach, the company's controller, has gathered the following information about the two products:

Canoe WP Kayak WP

Selling price $200 $244

Direct materials 80 60

Direct labor 16 32

Variable overhead 12 24

Fixed overhead 20 40

Profit per unit 72 88

Units sales demand 8000 14000

Machine Hours per unit 0.4 0.8

Required -

1. Calculate the total number of machine hours needed to produce enough units to meet the sales demand for the two products.

2. How should Charlie allocate the 12,000 available machine hours between the two products so that Outward Rowing maximizes its profits?

Reference no: EM132765329

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