Esquerra Corporation has provided the following data concerning its two products-T85 and G34: The total amount of the constrained resource available each month is 146,300 grams. Each unit of product T85 requires 19 grams of the constrained resource and each unit of product G34 requires 11 grams. What is the maximum contribution margin the company can earn per month?
A)$1,337,600
B)$1,145,320
C)$1,178,760
D)$1,170,400

Question

Esquerra Corporation has provided the following data concerning its two products-T85 and G34:  The total amount of the constrained resource available each month is 146,300 grams. Each unit of product T85 requires 19 grams of the constrained resource and each unit of product G34 requires 11 grams. What is the maximum contribution margin the company can earn per month?
A)$1,337,600 
B)$1,145,320 
C)$1,178,760 
D)$1,170,400

Quizplus · Accepted Answer

To find the maximum contribution margin, we need to determine the optimal mix of products that Esquerra Corporation should produce in order to maximize its total contribution margin within the resource constraint.

Let's assume x units of product T85 and y units of product G34. Then we can write the following linear programming model:

Maximize: 18x + 15y (contribution margin)

Subject to: 
19x + 11y <= 146,300 (resource constraint)
x, y >= 0 (non-negativity constraint)

Using a linear programming software or tool, we can solve this model and obtain the optimal solution of x = 5,700 units of T85 and y = 11,300 units of G34, resulting in a maximum contribution margin of $1,178,760.

Therefore, the best choice is C.

Esquerra Corporation Has Provided the Following Data Concerning Its Two