Answer:
$32,703
Explanation:
In limited resources we choose the highest contributing product to be manufacture first and so on.
It is assumed that total labor hour available are 5,000 hours.
Selling Price $54 $36 $44
- Variable cost $38 $14 $29
Contribution margin $16 $22 $15
Labor hours per unit 1.8 3.2 2.2
Demand 1200 2200 700
Total Labor Hours 2,160 7,040 1,540
To maximize the return we will choose the highest contributing product first.
Total Contribution = Demand for Highest contributing product x Contribution margin x Available resource / total resource required
Total Contribution = 2,200 x 22 x 5000/7040 = $32,702.7 = $32,703
