How many of each model should Delfi produce to maximize profit in May?

Nov 25th, 2015
DreamIt
Category:
Business & Finance
Price: $5 USD

Question description



Delfi Company produces two models of seats, Toro and Prep. Information regarding these products for May follows:

Toro

Prep

Number of units

3,000

7,000

Sales revenue

$120,000

$140,000

Variable costs

60,000

42,000

Fixed costs

24,000

50,000

Net Income

$36,000

$48,000

Pounds of plastic to produce one bucket

4.0

1.6

Contribution margin per unit

$20

$14

Due to increased demand of plastic in the market, Delfi Company can obtain only 9,000 pounds of plastic per month. Delfi can sell as many seats as it can produce of either model. How many of each model should Delfi produce to maximize profit in May considering the constraint?

Question 17 options:

Toro: 0; Prep: 4,375

Toro: 2,250; Prep: 0

Toro: 1,125; Prep: 2,812

toro; 0;  prep: 5,625


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