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Joe Company produces three types of donuts, Giant, Humungous and Death by Donut, that are in high demand. Following is information for each of these

Joe 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

Joe has a resource constraint of 2,000 machine hours available each month. Demand for each type of donut exceeds Joes capacity to produce the item.

  1. In order to maximize the companys total contribution margin, in what sequence should Joe fill orders?
  2. How many of each should he produce?

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