Daisley Products Inc.makes two products-B17U and R94X.Product B17U's selling price is $110.00 and its unit variable cost is $66.00.Product R94X's selling price is $238.00 and its unit variable cost is $142.80.The monthly demand is 1, 290 units for product B17U and 490 units for R94X.The constrained resource is a particular machine that is available for 10, 300 minutes each month.Each unit of product B17U requires 5 minutes on this machine and each unit of product R94X requires 14 minutes on this machine. What is the maximum contribution margin the company can earn per month?
A)$82, 940
B)$76, 920
C)$80, 023
D)$103, 408

Question

Quizplus · Accepted Answer

First, we need to find out how many units of each product can be produced given the machine constraint:

Let x be the number of units of B17U produced and y be the number of units of R94X produced.

5x + 14y ≤ 10,300 (machine constraint)

Next, we need to determine the objective function, which is the total contribution margin:

Z = 110x – 66x + 238y – 142.8y
Z = 44x + 95.2y

Now, we can use linear programming to maximize Z subject to the machine constraint:

Maximize Z = 44x + 95.2y subject to 5x + 14y ≤ 10,300
x ≥ 0, y ≥ 0

Solving this using a linear programming solver or graphing, we get:

x ≈ 1,909.57 (round up to 1,910 units)
y ≈ 309.29 (round down to 309 units)
Z ≈ $82,940

Therefore, the maximum contribution margin the company can earn per month is $82,940.

The best choice is A.