Question

An entity manufactures 4 products:

		A	C	E	F
	CM/Unit	$20.28	$30.47	$26.20	$36.91
	Kg of Y used	1	6	10	2
	KG of X used	3.00	4.00	8.71	7.51
	Expected demand (units)	3907	1823	847	3988

Material X is very scarce and it is anticipated that only 24026 kg will be available next year. There is expected to be 200,000 kg of material Y available. What is the maximum contribution margin that can be achieved next year?

Select one:

a. $149860

b. $281978

c. $159419

d. $224935

The Porter Company manufactures two products: A100 and A101. Each product uses skilled labour and the total hours of skilled labour available for the following year is limited to 9029 hours. Data for each of the two products is as follows:
		A100	A101
	Contribution margin per unit	$36	$48
	Hours of skilled labour per unit	1	2
	Maximum product demand (units)	5722	10365
What is the maximum contribution margin that can be achieved next year?

Select one:

a. $325044

b. $216696

c. $285360

d. $449424

Answer 1

1) Contribution margin per kg of X

	A	C	E	F
CM/Unit	20.28	30.47	26.20	36.91
Material X per unit	3	4	8.71	7.51
CM/Material X	6.76	7.6175	3.00	4.91
Rank	2	1	4	3

Optimum use :

	Kg	Unit
Product C	1823*4 = 7292	1823
Product A	3907*3 = 11721	3907
Proudct F	(24026-19013) = 5013	5013/7.51 = 667.50 Units

Maximum contribution = (1823*30.47+3907*20.28+667.50*36.91) = 159419

So answer is c) $159419

2)

Contribution margin per hour

	A100	A101
Contribution margin	36	48
Hour per unit	1	2
Contribution margin per hour	36	24
Rank	1	2

Maximum contribution margin = 5722*36+ (9029-5722/2)*48 = 285360

So answer is c) $285360