Question
Marco Ltd produces two products, A and B, in two departments, Assembly and Finishing. The following data are available: Product A Product B Unit selling
Marco Ltd produces two products, A and B, in two departments, Assembly and Finishing. The following data are available:
|
| Product A | Product B |
| Unit selling price | $190 | $130 |
| Unit variable cost | $90 | $50 |
| Labour hours per unit: |
|
|
| Assembly | 16 | 16 |
| Finishing | 16 | 8 |
Total labour hours available per week:
Assembly: 480
Finishing: 320
As the assistant to the general manager you have been asked to advise him as to how many units of each product should be produced and sold in order to maximise weekly total contribution margin.
Required:
a:State the objective function and the constraints that the company should use to maximise the total contribution margin generated by the two products.
b: How many product A and product B should be produced to maximise the total contribution margin? What is the total contribution margin at the optimal solution? Please note that you are NOT required to draw/show the graph.
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Fundamental Accounting Principles
Authors: Larson Kermit, Tilly Jensen
Volume I, 14th Canadian Edition
71051503, 978-1259066511, 1259066517, 978-0071051507
