Problem
Soccer Products installs standard and deluxe soccer goals. Selected data related to each product is as follows:
|
Standard
|
Deluxe
|
|
Sales price per unit
|
$1,500
|
$2,000
|
|
Direct materials per unit
|
500
|
600
|
|
Direct labor per unit
|
250
|
300
|
|
Variable overhead per unit
|
100
|
200
|
|
Direct labor hours per unit
|
1/4
|
1/2
|
Most of the installation process of the goal is done using direct labor. There are a maximum of 150,000 direct labor hours available each year.
Required:
A. If there is unlimited demand for both products, how many of each type of goal should be installed in order to maximize profits?
B. If the company believes that there is sufficient demand for up to 500,000 standard and 500,000 deluxe goals each year, how many of each type should be installed in order to maximize profits?