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Which model would be most profitable

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Problem - Dali Sound Ltd. makes high-end headphones. Noise-cancelling headphones are one of its largest offerings & there is a bottleneck in the production line is in the area that installs the noise-cancelling components to their headphones. Their 'Active Noise Cancelling' technology is state-of-the-art, it's not easy to train workers for this task & the demand for this technology far exceeds Dali's capacity. Information concerning three of the companies noise-cancelling headphones is as follows:

 

Radiance

Stellia

Celestee

Selling price per unit

1,400

1,500

1,800

Variable cost per unit

800

1,000

1,200

Noise cancelling area time required to produce one unit

8 hrs.

5 hrs.

10 hrs.

1. If the decision was made to produce additional Celestee headphones (only) by paying my skilled workforce overtime wages to try & keep up with demand, what is the maximum I would be willing to pay per hour?

2. If Dali were to only produce one model going forward, which model would be most profitable?

Reference no: EM133044729

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