Rosehill Co. manufactures two types of toilet paper: Ultra-strong and Ultra-soft. Because of a recent shortage of chlorine-based bleach, a key ingredient needed for the two products, the company has to decide the optimal amount of each product to produce. Information related to the two products that use chlorine-based bleach are shown below: Ultra-strong Ultra-soft Selling price per case $100 $96 Variable cost per case $40 $44 Chlorine-based bleach required per case (in liters) 10 8 Maximum monthly demand (in cases) 500 700 Assume that Rosehill Co. only has 7,200 liters of Chlorine-based bleach available next month. To maximize the company’s contribution margin next month, how many cases of Ultra-strong and how many cases of Ultra-soft the company should produce? Multiple Choice a)300 cases of Ultra-strong and 400 cases of Ultra-soft b)500 cases of Ultra-strong and 275 cases of Ultra-soft c)500 cases of Ultra-strong and 700 cases of Ultra-soft d)160 cases of Ultra-strong and 700 cases of Ultra-soft

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Rosehill Co. manufactures two types of toilet paper: Ultra-strong and Ultra-soft. Because of a recent shortage of chlorine-based bleach, a key ingredient needed for the two products, the company has to decide the optimal amount of each product to produce. Information related to the two products that use chlorine-based bleach are shown below:

 

 

Ultra-strong

Ultra-soft

Selling price per case

$100

$96

Variable cost per case

$40

$44

Chlorine-based bleach required per case (in liters)

10

8

Maximum monthly demand (in cases)

500

700

 

 

Assume that Rosehill Co. only has 7,200 liters of Chlorine-based bleach available next month. To maximize the company’s contribution margin next month, how many cases of Ultra-strong and how many cases of Ultra-soft the company should produce?

 

Multiple Choice

a)300 cases of Ultra-strong and 400 cases of Ultra-soft
b)500 cases of Ultra-strong and 275 cases of Ultra-soft
c)500 cases of Ultra-strong and 700 cases of Ultra-soft
d)160 cases of Ultra-strong and 700 cases of Ultra-soft
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