Dvorak Music produces two durable music stands Stand A Stand B Selling price $110 $100 Less variable costs 50 64 Contribution margin $ 60 $ 36 Stand A requires 2 labor hours and stand B requires 1 labor hour The company has only 350 available labor hours per week Further, the company can sell all i...

a Stand A Stand B Selling price 110 100 Variable costs 50 64 Contribution margin 60 36 Hours to pro ...

Dvorak Music produces two durable music stands: .........................................Stand A............Stand B Selling price ..............................$110............... $100 Less variable costs

Question:

Dvorak Music produces two durable music stands:
.........................................Stand A............Stand B
Selling price ..............................$110............... $100
Less variable costs ..........................50.................. 64
......................$ 60................ $ 36
Stand A requires 2 labor hours and stand B requires 1 labor hour. The company has only 350 available labor hours per week. Further, the company can sell all it can produce of either product.
Required
a. Which stand(s) should the company produce?
b. What would be the incremental benefit of obtaining 15 additional labor hours?
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...