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What is the objective formula for the month

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Reference no: EM132540097

Deatter Co. is a manufacturer of office furniture. It sells two products: X and Y. Cost information is listed below:

                                                                         Product X                    Product Y

Selling price                                                $490                          $560

Variable costs                                              280                              420

Contribution                                                $210                           $140

Machine hours to produce one unit                     0.8                              0.4

Maximum unit sales per month                             525                           700

  • The company presently operates the machine for a single eight-hour shift for 23 working days each month. Management is thinking about operating the machine for two shifts, which will increase the machine's availability by another eight hours per day for 23 days per month. This change would require additional fixed costs of $5,000 per month.

Question 1: If the company decides to set up the new shift, what is the objective formula for the month?

Reference no: EM132540097

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