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Problem 1: Sleep Well produces two types of pillows, a standard and a premium version. Sales price for the standard version is £10 with variable costs of £6 per unit. The premium pillow sells for £30 with variable costs of £15 per unit. The standard version requires one machine hour, while the premium version requires three machine hours. Total ?xed costs are £20 000 and the yearly machine hour capacity is 30 000 hours. Assuming that there are no selling constraints, what is the optimal product mix?
A) 0 standard pillows and 30,000 premium pillows
B) 0 standard pillows and 10 000 premium pillows
C) 30,000 standard pillows and 0 premium pillows
D) 15,000 standard pillows and 15,000 premium pillows
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