little toy company makes and sells miniature doll houses. little produces two kinds of houses: standard and deluxe. the demand for doll houses is highest in november and december. expecting this trend to continue, little is interested in how to best utilize available capacity. given the following information, how many standard and deluxe doll houses should little produce? standard deluxe demand 8,000 3,000 unit price $60 $80 unit variable cost $25 $35 unit contribution margin $35 $45 production hours per unit 0.5 1 available production hours 5,000 hrs total fixed costs $40,000 a. 5,000 standard; 3,000 deluxe. b. 3,636 standard; 7,364 deluxe. c. 8,000 standard; 1,000 deluxe. d. 3,636 standard; 1,363 deluxe.

Since the contribution per hour of the standard is more therefore first we should employ resources to manufacture the standard and then remaining to manufacture deluxe.

Calculation of units to be manufactured

Product type Hour per unit Total hours Units

Standard 0.5 4000 (8000x0.5) 8000

Delux 1 1000 1000

Total 5000 hours

Therefore we should manufacture 8000 units of standard and 1000 units of deluxe.

c. 8,000 standards; 1,000 deluxe

Examples of manufacturing include automotive agencies, bakeries, shoemakers, and tailors, as all of them create products, in preference to supplying services. But, for instance, logging or mining are not productions, as they no longer trade items into new merchandise.

System production is a production approach that creates goods by means of combining components, elements, or raw substances using a formula or recipe. It is often used in industries that produce bulk portions of products, together with meals, liquids, delicate oil, gasoline, prescription drugs, chemicals, and plastics.

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