The Ramos Company Manufactures Two Products: Treadmills and Elliptical Trainers

Essay

The Ramos Company manufactures two products: Treadmills and Elliptical Trainers. The costs and revenues are as follows:
$$\begin{array} { l c r } & & \text { Elliptical } \\& \text { Treadrnill } & \text { Trainer } \\\text { Sales price per unit } & \$ 300 & \$ 175 \\ \text { Variable cost per urit } & 160 & 85\end{array}$$

Total demand for the Treadmill product is 7,000 units and for the Elliptical Trainer product is 5,000 units. Machine time is a scarce resource. During the year, 48,000 machine hours are available. A Treadmill requires 6 machine hours per unit, while an Elliptical Trainer requires 2.5 machine hours per unit.
Required:
a. How many units of Treadmills and Elliptical Trainers should Ramos produce?
b. What will be the maximum possible contribution margin?