Figure 20-4 Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively.Only 500 labor hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:

-Refer to Figure 20-4.What is the objective function to maximize profits for Heft Company?
A) Minimize 5A + 2B
B) Maximize 1A + 4B
C) Maximize 40A + 30B
D) Minimize 40A + 30B

Question

Figure 20-4 Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively.Only 500 labor hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
 
-Refer to Figure 20-4.What is the objective function to maximize profits for Heft Company?
A) Minimize 5A + 2B 
B) Maximize 1A + 4B 
C) Maximize 40A + 30B 
D) Minimize 40A + 30B

Quizplus · Accepted Answer

The objective is to maximize profits, which is equal to the contribution margin per unit multiplied by the number of units produced. Therefore, the objective function is Profit = 40A + 30B. This function should be maximized subject to the constraints of available labor and machine hours. Option C represents the correct objective function to achieve this goal.

Figure 20-4 Heft Company Produces a and B with Contribution