Figure 25-6
Anderson Company Manufactures Two Different Products: a and B

question 3

Multiple Choice

Figure 25-6
Anderson Company manufactures two different products: A and B. The company has 100 kgs of raw materials and 300 direct labour-hours available for production.
The time requirements and contribution margins per unit are as follows: $\begin{array}{lcr}&A&B\\\text { Raw materials per unit (lbs.) } & 1 & 2 \\\text { Direct-labour hours per unit } & 4 & 2 \\\text { Contribution margin per unit } & E 4 & E 5\end{array}$
-Refer to Figure 25-6. What is the objective function for Anderson Company?

• A)Minimize £4A + £5B.
• B)Maximize £4A + £5B.
• C)Maximize £1A + £2B.
• D)Maximize £4A + £2B.

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Definitions:

Price of Output

The amount of money that a firm receives from the sale of goods and services it produces.

Price of Inputs

The cost associated with the resources used in the production of goods and services.

Marginal Cost

The cost added by producing one extra item of a product.

Arena

A place or scene of activity, debate, or conflict.