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Question - Woodie Ltd makes two types of wood floors, regular and deluxe. The following data concerns the two products:
Regular
Deluxe
Sales price (per square metre)
$16
$25
Variable cost
$10
$15
Labour (hours per square metre)
0.15
0.20
Maximum sales (units per week)
30,000
8,000
There are 4,600 hours of labour time available for production. Fixed production costs total $600,000 and all selling costs are fixed.
Required - What is the optimal production level in number of square metres for each product?
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