Newton Manufacturing has 36,000 labor hours available for producing M and N. Consider the following information:...
Newton Manufacturing has 36,000 labor hours available for producing M and N. Consider the following information: Product M Product N Required labor time per unit (hours) 2 3 Maximum demand (units) 6,100 8,600 Contribution margin per unit $ 9.00 $ 9.30 Contribution margin per labor hour $ 4.50 $ 3.10 If Newton follows proper managerial accounting practices in terms of setting a production schedule, how much contribution margin would the company expect to generate?
Multiple Choice
$54,150.
$125,880.
$128,680.
$134,880.
None of the answers is correct.
Homework Answers
Correct answer------------$128,680
Working
| Statement of Optimum mix | |||
| Product | Units to be Produced | Labor hours per unit | Labor hours consumed |
| M | 6,100 | 2.00 | 12200.00 |
| N | 7,933 | 3.00 | 23800.00 |
| Maximum Quantity | 36000.00 | ||
.
| Units | Contribution per unit | Total Contribution | |
| M | 6100.00 | $ 9.00 | $ 54,900 |
| N | 7933.33 | $ 9.30 | $ 73,780 |
| Total | $ 128,680 | ||
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