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Question
The Mad Hatter Company owns a machine that manufactures two types of chimney caps. Production time is .20 hours for cap A and .40 hours for cap B. The machine's capacity is 2,000 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 1,000 units of cap A and 6,000 units of cap B. Selling prices and variable costs per unit are shown below. Based on this information, what is the Mad Hatter's most profitable sales mix?| Cap A | Cap B | |
| Selling price per unit | $80 | $60 |
| Variable costs per unit | 53 | 42 |
A. 10,000 units of cap A.
B. 5,000 units of cap B.
C. 1,000 units of cap A and 5,000 units of cap B.
D. 1,000 units of cap A and 6,000 units of cap B.
E. 1,000 units of cap A and 4,500 units of cap B.
Answer
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