DETERMINING THE OPTIMAL PRODUCT MIX WITH ONE CONSTRAINED RESOURCE AND A SALES CONSTRAINT Comfy Fit Company manufactures two types of university sweatshirts, the Swoop and the Rufus, with unit contribution margins of $5 and $15, respectively. Regardless of type, each sweatshirt must be fed through a stitching machine to affix the appropriate university logo. The firm leases seven machines that each provide 1,000 hours of machine time per year. Each Swoop sweatshirt requires 6 minutes of machine time, and each Rufus sweatshirt requires 30 minutes of machine time. A maximum of 50,000 units of each sweatshirt can be sold.

Required:

. What is the contribution margin per hour of machine time for each type of sweatshirt?

. What is the optimal mix of sweatshirts?

. What is the total contribution margin earned for the optimal mix?

Cornerstone Exercise