If Lifemaster should produce both models, compute the mix that will maximize operating income.
E25-15 Lifemaster produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Lifemaster could use all its available machine hours to produce either model. The two models are processed through the same production departments. Data for both models is as follows:Per UnitDeluxeRegularSale Price1,020560Costs:Direct Material30090Direct Labor88188Variable Manufacturing Overhead26488Fixed Manufacturing Overhead*13846Variable Operating Expenses11165Total Costs901477Operating Income$119$83*allocated on the basis of machine hoursRequirements1. What is the constraint?2. Which model should Lifemaster produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.)3. If Lifemaster should produce both models, compute the mix that will maximize operating income.
