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Androgynous Bicycle Company (ABC) has the hottest new products on the upscale toy market — boys’ and girls’ bikes in bright fashion colors, with oversized hubs and axles, shell design safety tires, a strong padded frame, chrome-plated chains, brackets and valves, and a nonslip handlebar. Due to the seller’s market for high-quality toys for the newest baby boomers, ABC can sell all the bicycles it manufactures at the following prices; boys’ bikes — $220, girls’ bikes — $175. This is the price payable to ABC at its Orlando plant.
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The firm’s accountant has determined that direct labor costs will be 45% of the price ABC receives for the boys’ model and 40% of the price received for the girls’ model. Production costs other than labor, but excluding painting and packaging, are $44 per boys’ bicycle and $30 per girls’ bicycle. Painting and packaging are $20 per bike, regardless of model.
The Orlando plant’s overall production capacity is 390 bicycles per day. Each boy’s bike requires 2.5 labor hours and each girl’s model, 2.4 hours, to complete. ABC currently employs 120 workers, who each put in an 8-hour day. The firm has no desire to hire or fire to affect labor availability, for it believes its stable workforce is one of its biggest assets. Using a graphical approach, determine the best product mix for ABC.
