Profit maximization,
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What production combination will produce the greatest profit for the firm? Justify your choice.
See attached file.
The HighTech Corporation manufactures sound systems for the retail market. It makes two product lines: super model and deluxe model. Annual cost and production information is summarized below:
Total budgeted fixed manufacturing costs: $100,000
Total budgeted fixed selling costs $ 50,000
Hours of production capacity available each year 20,000 hours
Super Model Deluxe Model
Unit Selling Price $ 600 $ 1,200
Variable Costs per unit 300 600
Contribution margin per unit $ 300 $ 600
The market will permit the firm to sell as much or as little of each model that the firm wishes to manufacture. It takes 10 hours to make a super model and it takes 24 hours to make a deluxe model.
REQUIRED:
What production combination will produce the greatest profit for the firm? Justify your choice.
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Word file shows calculation of maximum profit and production combination that will produce the greatest profit for the firm.
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The HighTech Corporation manufactures sound systems for the retail market. It makes two product lines: super model and deluxe model. Annual cost and production information is summarized below:
Total budgeted fixed manufacturing costs: $100,000
Total budgeted fixed selling costs $ 50,000
Hours of production capacity available each year 20,000 hours
Super Model Deluxe Model
Unit Selling Price $ 600 $ 1,200
Variable Costs per unit 300 600
Contribution ...
Purchase this Solution
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