Curtis Remedies, Inc., produces two herbal mixes
Subject: Business / Accounting
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Question
Curtis Remedies, Inc., produces two herbal mixes: ImmuneBoost and MentaGrowth. ImmuneBoost has more ingredients and requires more machine time for grinding and mixing. The manufacturing process is highly mechanized; both products are produced by the same equipment by using different settings. For the coming period, 640,000 machine hours are available. Management is trying to decide on the quanti- ties of each product to produce (in bottles of 30 pills). The following data are available:
ImmuneBoost
MentaGrowth
Machine hours per unit
1.60
0.80
Unit selling price
$4.00
$4.80
Unit variable cost
$2.40
$3.60
Required
1. Determine the units of each product that should be produced in order to maxi- mize profits. What is the total contribution margin earned by this optimal mix?
2. Because of market conditions, the company can sell no more than 400,000 bot- tles of ImmuneBoost and 480,000 bottles of MentaGrowth. Now, what is the optimal mix? Total contribution margin?
