Reference no: EM133085237

Question - Italia Co. manufactures three models, Standard, Premium, and Deluxe. Estimated monthly demand and production volume for each model is provided in the following table. Only 650 machine hours are available per month. The following per unit data apply:

	Standard	Premium	Deluxe
Maximum demand (in units)	500	150	50
Current production (in units)	400	150	50
Contribution margin per unit	$50	$60	$70
Number of machine hours required	2	4	5

Required - Please answer all the following questions, and show your works and computations to get full credits.

1. What is the total contribution margin at the current level of production for each model?

2. What is the contribution margin per machine hour for each model?

3. Given maximum capacity of 650 machine hours, how many machine hours would you recommend of each model to maximize weekly production profits? How many units of each model?

4. If there is no limit for machine hours available per week (instead of only 650 machine hour per week), how many chairs of each model should Katy produce to maximize profits?