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Homer Simpson Company produces three types of donuts, Giant, Humungous and Death by Donut, that are in high demand. Following is information for each of
Homer Simpson Company produces three types of donuts, Giant, Humungous and Death by Donut, that are in high demand. Following is information for each of these products:
| Giant | Humungous | Death by Donut |
Selling price per item | $16.75 | $18.50 | $25.60 |
Variable cost per item | 14.00 | 13.50 | 19.20 |
Contribution margin per item | $2.75 | $5.00 | $6.40 |
Machine hours per item | 1.25 | .75 | 1.5 |
Orders | 800 | 600 | 700 |
Homer has a resource constraint of 2,000 machine hours available each month. Demand for each type of donut exceeds Homers capacity to produce the item.
- In order to maximize the companys total contribution margin, in what sequence should Homer fill orders?
- How many of each should she produce?
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