Question

Demi Delights manufactures specialtys chocolate bars X, Y and Z,whichshebelieveswillappealtotheyoungergenerationofconsumers.Thecontributionmarginsforthebarsare$0.40, $0.50 and$1.00 respectively .Demi Delights faces the problem of having only 2500 machine hours available per month. Each batch needs to use the same machine for processing;the hours required for each of the products are 1, 1 and 5 hours respectively. Demand for product X is 500, Y is 1,500 and Z is 1,000.How many units of each product will the firm produce?

A.1000 Z

B. 500X,1,500 Y and 1,000Z

C.500 X,1,500 Y and 100Z

D.500 X and 1,500Y

Answer 1

Since machine hours is the constraint, the contribution margin per machine hour should be used to priortise production
	X	Y	Z
Contribution margin per unit	0.4	0.5	1
Machine hours required per unit	1	1	5
Contribution margin per machine hour	0.4	0.5	0.2
Production Schedule
Product	Units	Machine hours per unit	Total machine hours
X	500	1	500
Y	1500	1	1500
Z	100	5	500
		Total	2500
Hence, the answer is C. C.500 X,1,500 Y and 100Z