Question

Consider the following production and cost data for two products, L and C: Product L Product C Contribution margin per unit $ 120 $ 112 Machine minutes needed per unit 10 minutes 8 minutes A total of 60,000 machine minutes are available each period and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period

Answer 1

Answer:

$840,000

Explanation:

Calculation to determine What is the largest possible total contribution margin that can be realized each period

First step

L =120/10

L= 12

C= 112/8

C= 14

Now let the largest possible total contribution margin

Largest possible total contribution margin C=112*( 60,000/8 )

Largest possible total contribution margin C= 112*7500 units

Largest possible total contribution margin C = $840,000

Therefore the largest possible total contribution margin that can be realized each period is $840,000