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Christine's Chronographs makes two models of a high-end watch—the model 94 and the model 101. Both models go through a special polishing step that requires the use of the single polishing machine at the company. The price and costs of the two models appear as follows.
Model 94 | Model 101 | |||||
Price per watch | $ | 4,800 | $ | 9,000 | ||
Variable cost per watch | $ | 2,450 | $ | 5,100 | ||
Polishing hours per watch | 2 | 3 | ||||
The polishing machine used for both models has a capacity of 21,000 hours annually. Fixed
Required:
a. Suppose that the maximum annual unit sales that Christine's can achieve is 10,500 units of the Model 94 and 8,000 of the Model 101. How many units of each watch model should Christine's produce annually?
b. Suppose that the maximum annual unit sales that Christine's achieve make is 8,500 units of the Model 94 and 5,500 of the Model 101. How many units of each watch model should Christine's produce annually?
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