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Which line of homes should it produce

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Question - Portable Enterprises produces two lines of mobile homes: double-wide and single-wide. Unit cost and revenue data pertaining to each product are shown below:

Selling Price: Double-wide $70,000, Single-wide $40,000

Total variable costs: Double-wide 45,000, Single-wide 20,000

Each double-wide home requires 350 different labor hours and 125 machine hours. Each single-wide home requires 175 direct labor hours and 150 machine hours. Demand for each line of homes far exceeds the company's total production capacity.

(a) If Portable's production capacity is constrained by limited direct labor hours, which line of homes should it produce?

(b) If Portable's total production capacity is constrained by machine hours, which line of homes should it produce?

Reference no: EM131820119

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