A company manufactures two types of plastic covered steel fencing: standard and heavy duty. Both types of fencing pass through the processes involving steel forming and plastic bonding.
The standard type of fencing sells for $15 per roll and the heavy duty fencing sells for $20 per roll. There is an unlimited market for the heavy duty fencing, but outlets for standard fencing are limited to 13,000 rolls per year. However, the factory operations of each process are limited to 24,000 hours per year. Direct labour at $10 per hour is based on forming hours. Variable overhead is applied based on total processing hours at $1 per hour. Direct materials cost $5 and $7 per roll for standard and heavy duty fencing, respectively. Processing hours per roll are:
Forming
Bonding
Total
Standard
0.6
0.4
1
Heavy duty
0.8
1.2
2
Assume that to maximize total contribution, the company should maximize its production of standard fencing. How many units of heavy duty fencing can be produced?
a) Zero
b) 5,500
c) 11,000
d) 15,666
e) 20,250