Optimal production mix. (CMA adapted, Chapter Appendix) Della Simpson, Inc., sells two popular brands of cookies, Dellas

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Optimal production mix. (CMA adapted, Chapter Appendix) Della Simpson, Inc., sells two popular brands of cookies, Della’s Delight and Cathy’s Chocolate Chip. Both cookies go through the Mixing and Baking Departments, but Della’s Delight is also dipped in chocolate in the Coating Department.

Michael Sesnowitz, vice-president for sales, believes that Della Simpson can sell all of its daily production of Cathy’s Chocolate Chip and Della’s Delight. Both cookies are made in batches of 300 cookies. The batch times (in minutes) for producing each type of cookie and the minutes available per day are as follows:

Mixing Baking Dipping Della’s Delight (in minutes) 36 12 24 Cathy’s Chocolate Chip (in minutes) 18 18 0 Minutes available per day 720 360 384 Revenue and cost data for each type of cookie are Cathy’s Della’s Delight Chocolate Chip Revenue per batch $ 630 $ 402 Variable cost per batch 210 102 Monthly fixed costs (allocated to each product) 24,420 19,980 Required 1. Formulate the decision facing Michael Sesnowitz as an LP model. Use D to represent the quantity of Della’s Delight made and sold and C to represent the quantity of Cathy’s Chocolate Chip made and sold.

2. Compute the optimal quantities of Della’s Delight and Cathy’s Chocolate Chip that Della Simpson should make and sell.

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Cost Accounting A Managerial Emphasis

ISBN: 9780131971905

4th Canadian Edition

Authors: Charles T. Horngren, George Foster, Srikant M. Datar, Howard D. Teall

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