Question

Deng Corporation manufactures two styles of lamps — Bedford Lamp and Lowell Lamp. The following per...

Deng Corporation manufactures two styles of lamps — Bedford Lamp and Lowell Lamp. The following per unit data are available:

Bedford Lamp

Lowell Lamp

Sales price

$30

$35

Variable costs

$18

$23

Machine hours required for one lamp

2

4

Total fixed costs are $50,000. Machine hour capacity is 30,000 hours per year. Assuming that the company can sell as many products as it can make, which product mix would deliver the highest operating income?

a

7500 Bedford Lamps and 15,000 Lowell Lamps

b

0 Bedford Lamps and 7500 Lowell Lamps

c

15,000 Bedford Lamps and 0 Lowell Lamps

d

15,000 Bedford Lamps and 15,000 Lowell Lamps
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