Question

Harrington Corporation produces three products, A, B, and C. Pertinent information on these products is as follows:

Product	Selling Price per Unit			Variable Cost per Unit			Fixed Cost per Unit			DL Hours per Unit
A	$	4.00		$	2.00		$	3.00		3
B	$	4.50		$	1.50		$	3.00		3
C	$	6.00		$	2.00		$	5.00		5

The objective function for a linear program to maximize contribution margin from the set of three products is:

Multiple Choice

• Z = $2A + $3B + $4C.

• Z = $5A + $4.5B + $7C.

• Z = $4A + $4.5B + $6C.

• Z = $1A + $1B + $1C.

• Z = $2A + $1.5B + $2C.

Answer 1

	A	B	C
Selling Price per Unit	4.00	4.50	6.00
Less: Variable Cost per Unit	2.00	1.50	2.00
Contribution margin per unit	2.00	3.00	4.00

The objective function for a linear program to maximize contribution margin is:

Z = $2A + $3B + $4C.

Option A is correct