Question

The following are production and cost data for two products, A and B.
Product A Product B
Contribution margin per unit $450 $280
Machine set-ups needed per unit 25 14

The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the maximum contribution margin for the year?
Answer


$240,000

$252,000

$216,800

$380,000

Answer 1

Product A Product B
Contribution margin per unit $450 $280
Machine set-ups needed per unit 25 14
Contribution per set up $18 $20

The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. The maximum contribution margin for the year is 12,000 x $20
= $240,000
Answer


$240,000