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Question - Crane Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 10,500 machine hours, and no other products that the company makes use these machines.
Sarah Jacob, the company's operations manager, is preparing the production schedule for the coming month and can't seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget.
Michael Stoner, the company's controller, has gathered the following information about the two products:
Dumbbell Rack
Weight Bench
Selling price per unit
$46
$59
Direct materials
20
15
Direct labor
5
8
Variable overhead
3
6
Fixed overhead
10
Profit per unit
$12
$20
Unit sales demand
5,000
8,000
Machine hours per unit
0.75
1.5
Required - How should Sarah allocate the 10,500 available machine hours between the two products so that Crane maximizes its profits?
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