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Price: $2.50

TreadMile produces two types of exercise treadmills: regular and deluxe. The exercise
craze is such that Lifemaster could use all its available machine hours to produce either
model. The two models are processed through the same production departments.
Data for both models is as follows:

      Deluxe Regular
Sale price 980 560
   Direct materials 300 90
   Direct labor 80 180
   Variable manufacturing overhead 252 84
   Fixed manufacturing overhead 108 36
   Variable operating expenses 113 69
Total cost 853 459
Operating income 127 101

1. What is the constraint?
2. Which model should TreadMile produce? Prepare the Product mix analysis. (Hint: TreadMile can product either 1 deluxe treadmill or 3 regular treadmills per machine hour.
3. If TreadMile should produce both models, compute the mix that will maximize
operating income.

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