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 manufacturing costs are $7,450,000 annually.   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?

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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 manufacturing costs are $7,450,000 annually.

 

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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