Product DGH has a monthly demand of 7,000 units. Its contribution margin is $18 per unit and $36 per direct labor hour. Product RBG has a monthly demand of 5,000 units. It's contribution margin is $15 per unit and $60 per direct labor hour. If the company only has 2,000 direct labor hours available, the company should produceunits of Product DGH andunits of Product RBG.

In comparison to the two, the highest contribution margin per hour is of Product RBG. Therefore, the direct labor hours would be used to first make Product RBG and then if any hours remain, then they will be used to make Product DGH.

Hours required for Product RBG = 60 / 15 = 4 unit per hour

Total hours required product 5000 units = 5,000 / 4 = 1,250 hours

This means that all 5,000 units of Product RBG will be produced.

The remaining hours 750 (2,000 - 1,250) will be used to make Product DGH.

Hours required for Product DGH = 36 / 18 = 2 units per hour

Total units of Product DGH produced = 2 x 750 (hours left of the 2000) = 1,500 units.

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