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DOILU LUMILUJE Todd Corporation produces two products, P and Q. P sells for $9.5 per unit; Q sells for $6.5 per unit. Variabl
unit: sells for $5.5 per unit. Variable costs for P and Q are $5 and $3, respectively. There are 6,300 direct labor hours per
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Answer #1
Product P Product Q
Selling price per unit 9.5 5.5
(-) Variable cost per unit 5 3
Contribution margin per unit 4.5 2.5
(/) Direct labor hours per unit 3 5
Contribution margin per direct labor hours 1.5 0.5
As the contribution margin per direct labor hour is greater of product P, it will sell product P
Maximum monthly contribution margin = Contribution margin per direct labor hour of product P * Direct labor hours available per month = 1.5 * 6300 9450
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