Question

Determining the Optimal Product Mix with One Constrained Resource and a Sales Constraint

Comfy Fit Company manufactures two types of university sweatshirts, the Swoop and the Rufus, with unit contribution margins of $5 and $15, respectively. Regardless of type, each sweatshirt must be fed through a stitching machine to affix the appropriate university logo. The firm leases seven machines that each provides 1,000 hours of machine time per year. Each Swoop sweatshirt requires 6 minutes of machine time, and each Rufus sweatshirt requires 30 minutes of machine time.

Assume that a maximum of 50,440 units of each sweatshirt can be sold.

Required:

If required, round your answers to the nearest whole number.

1. What is the contribution margin per hour of machine time for each type of sweatshirt?

	Contribution Margin
Swoop	$
Rufus	$

2. What is the optimal mix of sweatshirt?

	Optimal Mix
Swoop	units
Rufus	units

3. What is the total contribution margin earned for the optimal mix?
$

Answer 1

1)
		Contribution margin per unit	Time required per unit ( in hours)	Contriibution margin per hour
	Swoop	$                                                      5	0.1	$                                                      50
	Rufus	$                                                    15	0.5	$                                                      30
2)		Optimal Mix
	Swoop	50440	Units
	Rufus	3912	units
3)	Total Contribution margin earned = (50440*5)+(3912*15)
		=$310880