Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows:

-What is the objective function for maximizing profits?
A) Minimize $4X + $5Y
B) Maximize $4X + $5Y
C) Maximize $1X + $2Y
D) Maximize $4X + $2Y

Question

Hassel Company manufactures two different products, X and Y.The company has 100 pounds of materials and 300 direct labor hours available for production. The time requirements and contribution margins per unit are as follows:
 
-What is the objective function for maximizing profits?
A) Minimize $4X + $5Y 
B) Maximize $4X + $5Y 
C) Maximize $1X + $2Y 
D) Maximize $4X + $2Y

Quizplus · Accepted Answer

The objective is to maximize profits, which is calculated as (contribution margin per unit) × (number of units produced). Since X and Y have different contribution margins per unit, we need to maximize the total contribution margin earned. Therefore, the objective function is to maximize ($4X + $5Y).

Hassel Company Manufactures Two Different Products, X and Y