Handi-Tool Company manufactures and sells lawn and garden tools. Handi manufactures three kinds of pruning...
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Handi-Tool Company manufactures and sells lawn and garden tools. Handi manufactures three kinds of pruning shears: Snip-It, Deluxe Clipper, and Limb-Away. The demand for the pruning shears is highest in April. Expecting this trend to continue, Handi is interested in how to best utilize available capacity. Given the following information, what combination of pruning shears should Handi-Tool produce?
Snip-It
Deluxe Clipper
Limb-Away
Demand
200,000
100,000
60,000
Unit Price
$20
$30
$50
Unit variable cost
$10
$15
$20
Unit contribution margin
$10
$15
$30
Production rate (units per hour)
50
25
15
Available production hours
8,000 hrs
Total fixed costs
$400,000
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