Lit Furniture manufactures a small table and a large table
The small table sells for $900, has variable costs of $770 per table, and takes 7.50 labor hours to manufacture. The large table sells for $1,500, has variable costs of $900, and takes 15 direct labor hours to manufacture. If the company has no sales limitations on either product, it should make and sell as many of the large tables as possible to maximize operating income.
Indicate whether the statement is true or false
TRUE .Small Large
Sales revenue $900 $1,500
Variable costs 770 900
Contribution margin 130 600
Direct labor hours required 7.50 15
Contribution margin per unit per labor hour ($130 x 7.50 hours) $17.33
Contribution margin per unit per labor hour ($600 x 15 hours) $40.00
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