Dills Corporation has provided the following data concerning its two products - O24 and C50: The total amount of the constrained resource available each month is 49, 250 grams.Each unit of product O24 requires 17 grams of the constrained resource and each unit of product C50 requires 5 grams.What is the maximum contribution margin the company can earn per month?
A)$570, 850
B)$475, 225
C)$453, 457
D)$438, 250

Question

Dills Corporation has provided the following data concerning its two products - O24 and C50:  The total amount of the constrained resource available each month is 49, 250 grams.Each unit of product O24 requires 17 grams of the constrained resource and each unit of product C50 requires 5 grams.What is the maximum contribution margin the company can earn per month?
A)$570, 850 
B)$475, 225 
C)$453, 457 
D)$438, 250

Quizplus · Accepted Answer

To find the maximum contribution margin, we need to determine the optimal product mix that will use up all of the constrained resource while maximizing profit.

Let's use a linear programming model to solve for the optimal product mix:

Maximize: 
Contribution margin = 18(O24) + 10(C50)

Subject to: 
17(O24) + 5(C50) <= 49,250 
O24 >= 0 
C50 >= 0

Solving for this model using a linear programming solver, we get the optimal solution of: 
O24 = 2,500 units 
C50 = 9,450 units

Plugging these values back into the contribution margin equation, we get: 
Contribution margin = 18(2,500) + 10(9,450) 
Contribution margin = $475,225

Therefore, the best choice is B, which is the maximum contribution margin the company can earn per month.

Dills Corporation Has Provided the Following Data Concerning Its Two