A firm can produce one or both of two products, A or B. The contribution margin for
Question:
A firm can produce one or both of two products, A or B. The contribution margin for product A is $2.50, and for product B it is $1.25. Production of both products requires the consumption of a scarce raw material which is limited in supply to 18,000 pounds. One unit of A requires 2 pounds and one unit of B requires 13 pounds. In addition, one unit of A requires 2 hours of machining time and one unit of B requires 5 hours. There are no more than 30,000 hours of machining time available. Each unit requires assembly time of 1.25 hours for A or B. There are a maximum of 10,000 hours of assembly time available. 255 Required:
If the firm’s goal is to maximize total contribution margin (CM) by use of linear programming techniques, determine maximum CM by utilizing the graphic solution method. (Round all your values to the nearest dollar.)
Step by Step Answer:
Cost Accounting Concepts And Applications For Managerial Decision Making
ISBN: 9780070103108
2nd Edition
Authors: Ralph S. Polimeni, James A. Cashin, Frank J. Fabozzi, Arthur H. Adelberg