Gobbler Pie Company produces five types of frozen pies. Each type of pie filling

Question

Gobbler Pie Company produces five types of frozen pies. Each type of pie filling requires a certain number of hours in a large commercial mixer, but Gobbler owns only one mixer. Consequently, the limited number of mixer hours is a constraint on production. To maximize its operating income, Gobbler should emphasize production of the type of pie that: Generates the highest contribution margin per pie the least amount of mixer time per selling price of the pie Uses the least amount of mixer time per pie produced Generates the highest contribution margin per mixer hour None of the

Explanation / Answer

Answer:

To maximize its operating income, Gobbler should emphasize production of the type of pie that

Correct answer is:

Generates the highest contribution margin per mixer hour

Explanation:

Production of all five types of frozen pies requires certain number of hours in a large commercial mixer.

As Gobbler owns only one mixer and hence limited number of mixer hours is constraint on production.

In such a scenario, Gobbler should calculate contribution margin for each type of pie and find margin per mixer hour for each type of pie.

The pie which gives highest contribution margin per mixer hour should be produced first to maximize operating profit.

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