Karl's Kitchens Is Experimenting with Different Vinegars for Sale on the Domestic

Karl's Kitchens is experimenting with different vinegars for sale on the domestic market. The contribution margins per carton for three types V1, V2 and V3 are $120, $100 and $150 respectively. The firm is constrained in terms of labour hours, and the labour hours required per carton of each type of vinegar is 2 hours, 1.5 hours and 3 hours respectively. Assume the firm has 2240 available labour hours per month, and the monthly demand is 1200 cartons of V1, 800 cartons of V2 and 300 cartons of V3. What is the product mix that will maximise profit?

A) 800 V2, 520 V1
B) 300 V3, 670 V2
C) 1 200 V1, 800 V2, 300 V3
D) 1 120 V1

Correct Answer:

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