Buzz Appliances manufactures two​ products: Food Processors and Espresso Machines. The following data are​ available: Food Processors Espresso Makers Sales price ​$125 ​$ 225 Variable costs ​ $ 80 ​ $ 190 The company can manufacture either two food processors per machine hour or three espresso machines per machine hour. The​ company's production capacity is​ 1,600 machine hours per month. To maximize​ profits, what product and how many units should the company produce in a month​ (assuming unlimited demand for both​ products)? A. 3,200 Food Processors and 4,800 Espresso Machines B. 3,200 Food Processors and 0 Espresso Machines C. 90 Food Processors and 105 Espresso Machines D. 4,800 Espresso Machines and 0 Food Processors

• To determine which product Buzz Appliances should produce to maximize profits, we need to calculate the contribution margin per machine hour for each product.
• First, we calculate the contribution margin per unit by subtracting the variable cost from the sales price for each product.
• For Food Processors: Contribution Margin (CM) per unit = Sales Price per unit - Variable Cost per unit CM per Food Processor = $125 - $80 = $45 per unit
• For Espresso Machines: CM per Espresso Machine = $225 - $190 = $35 per unit
• Next, we determine the contribution margin per machine hour. Since we know how many of each product can be produced per machine hour, we can calculate this.
• For Food Processors, two can be produced per machine hour, so: CM per machine hour for Food Processors = CM per unit * Number of units per machine hour CM per machine hour for Food Processors = $45 * 2 = $90 per machine hour
• For Espresso Machines, three can be produced per machine hour, so: CM per machine hour for Espresso Machines = CM per unit * Number of units per machine hour CM per machine hour for Espresso Machines = $35 * 3 = $105 per machine hour
• Now we can compare the contribution margin per machine hour for each product. Since the company wants to maximize profits, it should produce the product with the higher contribution margin per machine hour. The calculations show that Espresso Machines have a higher contribution margin per machine hour ($105) than Food Processors ($90).
• Therefore, to maximize profits, the company should produce only Espresso Machines. Given that the company's production capacity is 1,600 machine hours per month, and it can produce three Espresso Machines per machin hour, the company should produce:
• Number of Espresso Machines = 1,600 machine hours *
• 3 Espresso Machines per machine hour Number of Espresso Machines = 4,800

Thus, the answer is D. 4,800 Espresso Machines and 0 Food Processors.