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Talbot Industries manufactures two models of wireless headset: TI-12 and TI-28. Each product requires time on a single machine. The machine has a monthly capacity of 612 hours. Total market demand for the two products is limited to 2,160 units of TI-12 and 1,080 units of TI-28 monthly. Talbot is currently producing and selling 1,580 TI-12 models and 796 TI-28 models each month. Cost and machine-usage data for the two products are shown in the following spreadsheet, which analysts at Talbot use for production planning purposes:

	TI-12	TI-28	Total
Price	$ 96	$ 338
Less variable costs per unit
Material	31	98
Labor	37	72
Overhead	8	44
Contribution margin per unit	$ 20	$ 124
Fixed costs
Manufacturing			$ 34,800
Marketing and administrative			$ 31,800
			$ 66,600
Machine hours per unit	0.1	0.5
Machine hours used			556
Machine hours available			612
Quantity produced	1,580	796
Maximum demand	2,160	1,080
Profit			$ 63,704

Required:

a. What is the optimal production schedule for Talbot Industries? In other words, how many TI-12s and TI-28s should the company produce each month to maximize monthly profit?

b. If Talbot Industries produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?

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