Sung Company produces two models of its product with the same machine. The machine has a capacity of 200 hours per month. The following information is available.

Required

1. Determine the contribution margin per machine hour for each model.
2. How many units of each model should the company produce? How much total contribution margin does this mix produce per month?
3. Assume the maximum demand for the Standard model is 180 units (not 550 units). How many units of each model should the company produce? How much total contribution margin does this mix produce per month?

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Standard Pro Selling price per unit $60 $80 Variable costs per unit ..... Contribution margin per unit ...... 20 30 $40 $50 Machine hours per unit 1 hour 2 hours Maximum unit sales per month .... 550 units 175 units