Q8Bikes produces two types of bicycles: Deluxe (D) and Super Deluxe (SD). Demand for the...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Q8Bikes produces two types of bicycles: Deluxe (D) and Super Deluxe (SD). Demand for the products is high for both lines. The company uses the same machinery to produce both lines. The machinery can be run for a maximum of 5000 hours per period. Q8Bikes can produce 15 D bikes per hour or 10 SD bikes per hour. Fixed costs are 55,000 KWD per period. Sales prices and variable costs are as follow:
Deluxe
Super Deluxe
Sales price per unit
KWD 190.000
KWD 250.000
Variable cost per unit
65.000
86.000
Requirements
Which product should Q8Bikes emphasize? Why?
To maximize profits, how many bikes of each line should Q8Bikes produce? Answer for each alternatives a, b, and c. Alternatives are independent.
If for every D bike sold an SD bike is to be sold.
If the maximum SD bikes that could be sold per period is 45,000.
For maintenance purposes, only 95% of the available capacity can be used and for every SD bike sold 2 D bikes can be sold.
Given your answers in (2) what will the companys operating income be for each alternative?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
