What is the optimal production schedule for slavin

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Reference no: EM131977043

Problem

Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products is limited to 150 units (each) monthly. Slavin is currently producing 110 Alphas and 110 Deltas each month. Cost and machine-usage data for the two products are shown in the following table, which Slavin managers use for planning purposes:


Alpha

Delta

Total

Price

$

120


$

150






Less variable costs per unit











Material


20



35






Labor


26



37






Overhead


14



14






Contribution margin per unit

$

60


$

64






Fixed costs











Manufacturing







$

8,000



Marketing and administrative







$

5,000










$

13,000



Machine hours per unit


2.0



2.5






Machine hours used








495



Machine hours available








500



Quantity produced


110



110






Maximum demand


150



150






Profit

$

640









Required:

a. What is the optimal production schedule for Slavin? In other words, how many Alphas and Deltas should the company produce each month to maximize monthly profit?

b. If Slavin produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?

Reference no: EM131977043

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