Answer:
a.
A,B,C
b.
1,100 units of Product A and 1,079 units of Product B
c.
Total Contribution Margin $37,106
Explanation:
Product A B C
Selling price $68.00 $35.00 $52.00
Variable cost per unit $48.00 $21.00 $44.00
Contribution Margin $20.00 $14.00 $8.00
Direct labor hours per unit 1.8 2.8 1.9
Contribution per labor Hour $11.11 $5.00 $4.21
Demand 1,100 1,900 2,100
Numbers of Hours Required 1,980 5,320 3,990
Production should be prioritize based on contribution margin per labour hour, because labor hours is a scarce resource and decision should be made considering the benefit on each hour.
The order Should be A,B,C
We should Sale the 1,100 unit of Product A because it has maximum per labor hour contribution and 1,079 units of Product B.
Labor Hour available for Product B and C = 5,000 - 1,980 = 3,020 hours
All of these will be used for Product B
Number of Unit to be sold = 3,020 / 2.8 = 1,079 units
Total Contribution Margin = (1,100 x 20) + (1,079 x 14) = $22,000 + $15,106 = $37,106
