Holly Manufacturing Company produces two cello models. One is a standard acoustic cello that sells for $600 and is constructed
from medium-grade materials. The other model is a custom-made amplified cello with pearl inlays and a body constructed from special woods.
The custom cello sells for $900. Both cellos require 10 hours of direct labor to produce, but the custom cello is manufactured by more
experienced workers who are paid at a higher rate.
Most of Holly’s sales come from the standard cello, but sales of the custom model have been growing. Following is the company’s sales,
production, and cost information for last year: