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KX Corporation: produce vs. buy stools

KX Corporation makes stools and tables. The company can sell as many stools and/or tables as it can produce, buts machine-hour capacity is limited. Revenue and cost data for each unit are given as follows:
Stool Table
Selling Price $7.50 $18.00
Variable Costs $6.00 $15.50

It takes 1 machine hour to make a stool and 2 machine hours to per table. Total fixed costs for KX corporation amounts to $25,000 annually and would not change under any production modifications. Give this information KX should

a) produce tables rather than stools
b) produce stools rather than tables
c) be equally well off either producing all tables or all stools

Solution Preview

Stool Table
Selling Price $7.50 $18.00
Variable Costs ...

Solution Summary

The solution examines KX corporation. The expert determines produce versus buy stools.