Figure 20-4
Montgomery 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 Montgomery Company?
A) Minimize 6A + 3B
B) Maximize 2A + 5B
C) Minimize 40A + 30B
D) Maximize 40A + 30B

Question

Figure 20-4
Montgomery 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 Montgomery Company?
A) Minimize 6A + 3B 
B) Maximize 2A + 5B 
C) Minimize 40A + 30B 
D) Maximize 40A + 30B

Quizplus · Accepted Answer

The objective of Montgomery Company is to maximize profits, which is given by the contribution margin of the products multiplied by the number of units sold. In this case, the contribution margins per unit of A and B are $40 and $30, respectively. Therefore, the objective function to maximize profits is: 
Profit = 40A + 30B 
where A and B are the number of units of products A and B sold, respectively.

Figure 20-4 Montgomery Company Produces a and B with Contribution Margins Per