Marsalls Products Inc. manufactures and sells two products CD-ROMs and DVD’s. The latest forecast on me products and their costs tor the coming year is shown in the following table.

Marsalls Products Inc. manufactures and sells two products CD-ROMs and DVD’s. The latest forecast on me products and their costs tor the coming year is shown in the following table.

Note 1: Fixed manufacturing cost of Si.500 000 per year is allocated to products based on the number of machine hours required to produce the product at a rate of S3 per machine

hour

The Manufacturing Team leader just informed the CEO that a fire occurred at one of the manufacturing lines and that line would be unavailable for the next 12 months. The result is that mere will only be 400 000 machine Hours available The CEO requested the management team to revise the plan for the coming year based on the new constraint. The Marketing Team leader stated that in order to minimize customer complaints about the shortage, a minimum of 100,000 units of each product should be produced With the new information from the Manufacturing and Marketing teams what is the optimal product mix for the coming 12 months” Assume Marsalls can sell allot its production.
A . 100,000 CD-ROM’s and 150,000 DVD'[s
B. 120.000 CD-ROM’s 140,000 DVD.
C. 150.000 CD-ROMS and 125.000 DVD
D. 200,000 CD-ROm’s a dn 100,000 DVD

View Answer

Answer: D