Adrian Bicycle Company (ABC) has the hottest new products on the upscale toy market for boys’ and girls’ bikes in bright fashion colors, with oversized hubs and axles, shell design safety tires, a strong padded frame,-chrome plaited chains, brackets and valves, and a non slip handlebar.

Question

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: boy’s bikes-P220, girls’ bikes-P175. This is the price payable to ABC at its Francistown plant.
The firm’s accountant has determined that direct labor costs will be 45% of the price ABC receives for the boys’ model and 40% for the price received for the girls’ model.
Production costs other than labor, but excluding painting and packaging, are P44 per boys’ bicycle and P30 per girls’ bicycle. Painting and packaging are P20 per bike, regardless of model.
The Francistown plant’s overall production capacity is 390 bicycles per day. At least 100 boys’ bicycles should be produced per day and not more than 250 girls’ bikes should be produced per day. Each boy’s bike requires 3.00 labor hours and each girl’s model, 1.5 hours, to complete. ABC currently employs 120 workers, who each put in an eight 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.