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Managerial Accounting

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Alice Inc: Labor Hour Constraint; Production Plan

MGRACT-HRTY2Q

Alice Inc. (AI) makes three types of gift baskets as a part-time job on the weekends. She is not ready to quit her Monday-Friday job (yet) to make baskets full time. Until then, she can only work on the baskets 80 hours per month.

Meat Basket Cheese Basket Sweet Basket
Sales price per basket \$50.00 \$40.00 \$35.00
Variable costs \$35.00 \$24.00 \$17.50
Labor hours per basket 0.40 hours 0.20 hours 0.25 hours
Market demand, baskets 60 150 200

For the production schedule that maximizes profits, how many Meat Baskets should be produced?