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:
$$\begin{array} { | l | r | r | } \hline & \text { Treadmll } & \text { Eliptical Trainer } \\\hline \text { Sales price per unit } & \$ 300 & \$ 175 \\\hline \text { Variable cost per unit } & 160 & 85 \\\hline\end{array}$$

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?