Solution-Calculate the contribution margin at the optimal

Calculate the contribution margin at the optimal solution

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Reference no: EM132986544

Question - Galaxy Candy Company manufactures two popular candy bars, the Eclipse bar and the Nova bar. Both candy bars go through a mixing operation where the various ingredients are combined, and the Coating Department where the bars from the Mixing Department are coated with chocolate. The Eclipse bar is coated with both white and dark chocolate to produce a swirled effect. A material shortage of an ingredient in the Nova bar limits production to 300 batches per hour. Production and sales data are presented in the following table.

	Mixing	Coating
Available capacity in hours	525	500
Use of capacity in hours per batch of product:
Eclipse	1.5	2.0
Nova	1.5	1.0

Management believes that Galaxy can sell all of its daily production of both the Eclipse and Nova bars. Other data follow:

	Eclipse	Nova
Selling price per batch	P600	P700
Variable cost per batch	200	450

REQUIRED -

a. Formulate the objective function and all of the constraints in order to maximize contribution margin.

b. How many batches of each type of candy bar (Eclipse and Nova) should be produced to maximize the total contribution margin?

c. Calculate the contribution margin at the optimal solution.

Reference no: EM132986544

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Calculate the contribution margin at the optimal solution

Reference no: EM132986544

Reference no: EM132986544

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