Bright Horizons produces standard and energy-efficient light bulbs. The standard light bulb is sold at...
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Bright Horizons produces standard and energy-efficient light bulbs. The standard light bulb is sold at $1.50 each, and the energy-efficient light bulb is sold at $3.00 each. The variable cost of making the standard light bulb is $0.90 each. It costs an extra $0.60 to make the energy-efficient light bulb. It takes 10 labor hours to produce 1,000 standard light bulbs and 15 labor hours to produce 1,000 energy-efficient light bulbs. There are 2,500 hours of labor time available for production each week. The maximum weekly sales for the standard and energy-efficient light bulbs are 30,000 and 10,000 units, respectively. Fixed production costs total $150,000 per year. All selling costs are fixed.
Required: (a) Calculate the optimal production level in number of units for each product. (b) Prepare an income statement for the company based on the optimal production level. (c) Determine the break-even point in units for each type of light bulb.
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