Question: Chisholm Industries solved the following linear programming problem as the basis for its budget for the next operating period. Fixed costs are budgeted as

its budget for the next operating period. Fixed costs are budgeted as

Chisholm Industries solved the following linear programming problem as the basis for its budget for the next operating period. Fixed costs are budgeted as $80 per unit. Chrisholm produces two products, the "regular" and the "premium". Objective function: Maximize $250x Regular + $300 Premium Subject to: Assembly hours constraint: 10 hours Regular +5 hours Premium 2,000 hours Testing hours constraint: 5 hours Regular + 20 hours Premium 10,000 hours Excel's Solver function produced the output shown below: Variable Cells Cell Name $B$11 Number to produce Regular $C$11 Number to produce Premium Final Reduced Objective Allowable Allowable Value Cost CoefficientIncrease Decrease 0 400 -350 250 350 1E+30 0 300 1E+30 175 Constraints Final Shadow Constraint Allowable Allowable Cell Name $B$15 Value Price R.H. Side Increase Decrease _Labor availability for assembling Hours used 2000 60 2000 500 2000 8000 0 10000 1E+30 2000 $B$16 _Labor availability for testing Hours used a) What quantity of each product should they produce? (2 marks) Regular = Premium = b) What is the total contribution margin with this sales mix? (1 mark) Total contribution margin with this sales mix is $

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