Tonix Corporation produces two products, P and Q
P sells for $7.00 per unit; Q sells for $6.00 per unit. Variable costs for P and Q are $3.00 and $5.00, respectively. There are 3,300 direct labor hours per month available for producing the two products. Product P requires 2.00 direct labor hours per unit, and product Q requires 2.00 direct labor hours per unit. The company can sell up to 300 units of each kind per month. What is the maximum monthly contribution margin that Todd can generate under the circumstances? (Round to nearest whole dollar.)
A) $1,200
B) $1,350
C) $2,550
D) $17,850
C .C)
P Q
Sales price $7.00 $6.00
Variable costs 3.00 5.00
Contribution margin $4.00 $1.00
Direct labor hour per unit 2.00 2.00
Contribution margin per direct labor hour $2.00 0.50
Ranking 1 2
Hours
No. of units available
Total 3,300
P 300 600
Q 1,350 2,700
P Q Total
Sales revenue $2,100 $8,100 $10,200.00
Variable cost 900 6,750 7,650.00
Contribution margin $1,200 $1,350 $2,550
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