Answered: Patz Company produces two types of…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...

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Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins of $400 and $800, respectively. Assume initially that Patz can sell all that is produced of either component. Part A requires two hours of assembly, and B requires five hours of assembly. The firm has 400 assembly hours per week.

Required:

1. Express the objective of maximizing the total contribution margin subject to the assembly-hour constraint.

Objective function: Max Z = $400 A + $800 B

Subject to: fill in the blank 1 A + fill in the blank 2 B ≤ fill in the blank 3

2. Identify the optimal amount that should be produced of each machine part. If none of the components should be produced, enter "0" for your answer.

Component A	fill in the blank 4	units
Component B	fill in the blank 5	units

Identify the total contribution margin associated with this mix.
$fill in the blank 6

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