Long Company makes 3 types of plastic garbage containers. Each of the 3 types of cans re¬

quires the use of a special machine that has total operating capacity of 204,000 hours per year. Information on each of the 3 products is provided below:

The marketing manager has determined that the company can sell all that it can produce of each of the three products.
Required:
1. How many of each product should be sold to maximize total contribution margin? What is the total contribution margin for this product mix?
2. Suppose that Long can sell no more than 800,000 units of each type at the prices indi¬
cated. What product mix would you recommend, and what would be the total contri¬
bution margin?

Transcribed Image Text:

Basic Standard Deluxe Selling price $12.00 $17.00 $27.00 Unit variable cost $6.00 $8.00 $12.00 Machine hours required 0.15 0.25 0.75