Tiffany Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively.Only 200 labor hours and 400 machine hours are available for production. Time requirements to produce one unit of X and Y are as follows:

-What is the objective function to maximize profits for Tiffany Manufacturing Company?
A) Minimize 10X + 90Y
B) Maximize 1X + 2Y
C) Maximize 10X + 90Y
D) Minimize 1X + 2Y

Question

Tiffany Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively.Only 200 labor hours and 400 machine hours are available for production. Time requirements to produce one unit of X and Y are as follows:
 
-What is the objective function to maximize profits for Tiffany Manufacturing Company?
A) Minimize 10X + 90Y 
B) Maximize 1X + 2Y 
C) Maximize 10X + 90Y 
D) Minimize 1X + 2Y

Quizplus · Accepted Answer

The objective function for maximizing profits is to maximize total contribution margin. In this case, the contribution margin per unit of X and Y are $10 and $90, respectively. Hence, the objective function is to maximize 10X + 90Y. Option A and D are incorrect because they minimize the contribution margin instead of maximizing it. Option B is incorrect because it does not take into account the contribution margins of X and Y.

Tiffany Manufacturing Company Produces X and Y with Contribution Margins