Exhibit 4 - Resource Allocation Happiland is dealing with some capacity challenges in their candy division. They currently produce three types of sour candies, Sugarbombs, Cherrysqueezes, and Sourblasters. They all use the same type of sour flavouring, "Xsour", and there have been challenges getting that flavouring. The company is unsure of which to produce, and so have been basing their production on demand numbers (ie Sugarbombs first then the other two). The Xsour costs $5 per KG and Happiland can only procure 245 KG of Xsour. They must produce a minimum of 100 bags of each type of candy. They are unsure how to proceed to determine the optimal production structure subject to these constraints. Requirement: Provide the optimal production schedule for the candy division. Sugarbombs Cherrysqueezes Sourblasters Selling price per bag $5.50 $4.50 $7.00 Demand (in bags) 2000 1000 1000 Variable costs/bag 4.00 3.50 4.50 Fixed costs/bag .75 .50 .65 KG of Xsour per bag 0.05 0.25 0.10 Minimum bags 100 100 100 produced Requirement: Provide the optimal production schedule for the candy division.

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Chapter1: Financial Statements And Business Decisions
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Exhibit 4 - Resource Allocation
Happiland is dealing with some capacity challenges in their candy division. They currently produce
three types of sour candies, Sugarbombs, Cherrysqueezes, and Sourblasters. They all use the same
type of sour flavouring, "Xsour", and there have been challenges getting that flavouring. The
company is unsure of which to produce, and so have been basing their production on demand
numbers (ie Sugarbombs first then the other two).
The Xsour costs $5 per KG and Happiland can only procure 245 KG of Xsour. They must produce a
minimum of 100 bags of each type of candy. They are unsure how to proceed to determine the
optimal production structure subject to these constraints.
Requirement: Provide the optimal production schedule for the candy division.
Sugarbombs
Cherrysqueezes
Sourblasters
Selling price per bag
$5.50
$4.50
$7.00
Demand (in bags)
2000
1000
1000
Variable costs/bag
4.00
3.50
4.50
Fixed costs/bag
.75
.50
.65
KG of Xsour per bag
0.05
0.25
0.10
Minimum bags
100
100
100
produced
Requirement: Provide the optimal production schedule for the candy division.
Transcribed Image Text:Exhibit 4 - Resource Allocation Happiland is dealing with some capacity challenges in their candy division. They currently produce three types of sour candies, Sugarbombs, Cherrysqueezes, and Sourblasters. They all use the same type of sour flavouring, "Xsour", and there have been challenges getting that flavouring. The company is unsure of which to produce, and so have been basing their production on demand numbers (ie Sugarbombs first then the other two). The Xsour costs $5 per KG and Happiland can only procure 245 KG of Xsour. They must produce a minimum of 100 bags of each type of candy. They are unsure how to proceed to determine the optimal production structure subject to these constraints. Requirement: Provide the optimal production schedule for the candy division. Sugarbombs Cherrysqueezes Sourblasters Selling price per bag $5.50 $4.50 $7.00 Demand (in bags) 2000 1000 1000 Variable costs/bag 4.00 3.50 4.50 Fixed costs/bag .75 .50 .65 KG of Xsour per bag 0.05 0.25 0.10 Minimum bags 100 100 100 produced Requirement: Provide the optimal production schedule for the candy division.
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