Problem
GHB Company produces a salt-free, whole-grain bread and a carob-chip cake. The demand for these products is exceeding GHB's production capacity. The company has only 80,000 direct labor hours available. A case of bread requires one direct labor hour, while a case of cookies requires half a direct labor hour. The company estimates that it can sell 100,000 cases of bread and 50,000 cases of cookies in the next year. The following financial information is available:
BREAD COOKIES
Selling price per case $60 $30
Variable costs per case $25 $10
How should GHB allocate its production capacity between bread and cookies.