Healthy Time produces two types of exercise treadmills: regular and deluxe. The exercise craze is su

/in /by

Healthy Time produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Healthy Time 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 are as​ follows:

Per Unit

Deluxe

Regular

Sales Price

$1,020

$580

Costs:

Direct materials

270

120

Direct labor

86

180

Variable manufacturing overhead

234

78

Fixed manufacturing overhead*

114

38

Variable operating expenses

113

61

Total costs

817

477

Operating income

$203

$103

*allocated on the basis of machine hours

Requirements:

1. What is the​ constraint?

2. Which model should Healthy Time produce?

​(​Hint:

Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each​ product.)

3. If Healthy Time should produce both models, compute the mix that will maximize operating income.