Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below.Suppose the plant decides to make the maximum number of iPhone components possible and reach the rest of its capacity by making Droid phones.How much profit will it make? Monthly Product

A)$3750
B)$1500
C)$5250
D)$4000

Question

Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below.Suppose the plant decides to make the maximum number of iPhone components possible and reach the rest of its capacity by making Droid phones.How much profit will it make? Monthly Product

A)$3750 
B)$1500 
C)$5250 
D)$4000

Quizplus · Accepted Answer

To maximize profit, the company wants to make the most profitable components first, which are the iPhones since they generate $5000 in revenue per unit. Then, they will use the remaining capacity to make the Droid components, which generate $2500 in revenue per unit.

To determine the maximum number of iPhone components that can be produced, we need to find the bottleneck resource, which is the component that requires the most amount of time per unit. In this case, it is the iPhone screen, which requires 1.5 hours per unit.

Let's say the company has a total of 3000 hours available per month. We can use this information to determine the optimal production mix:

Maximum number of iPhone components = 3000 / 1.5 = 2000
Maximum number of Droid components = (3000 - (2000 * 1.5)) / 1 = 1000

Total revenue from iPhones = $5000 * 2000 = $10,000,000
Total revenue from Droids = $2500 * 1000 = $2,500,000

Total profit = Total revenue - Total cost
Total cost = (2000 * 1.5 * $20) + (1000 * 1 * $20) = $63,000

Total profit = $12,500,000 - $63,000 = $12,437,000

Therefore, the maximum profit the company can make is $12,437,000, or choice C.

Production Data for the Number of Hours Required Per Unit