Isochlorine is produced in a chemical process that is very threatening to the environment. As a result of this, the government has limited the yearly production.
Company Soleil uses isochlorine to produce four cosmetic products A, B, C, and D. Soleil has an inventory of 2,000 kg of isochlorine at a value of $20,000.
As a result of production restrictions imposed on their supplier, Soleil will not be able to purchase additional isochlorine during the coming period.
Although Soleil, by means of its commercial campaign, suggests that its main goal is to let people experience the sanitary effects of its cosmetic products, the management is only interested in profit maximization.
The management of Soleil must decide how to use the scarce material. The following information is available concerning the next period:

Required

The labor tariff per hour is $30. Labor costs are linear variable. Sales provision is 10% of the selling price.
Which products must Soleil produce during the next period? What is the contribution margin for the next period? Show your calculations.

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Product ABCD Sales 3,000 8,000 4,000 5,000 Selling Price per Labor-Hours per Unit Unit $ 70 $ 60 $100 $80 1.0 1.2 2.0 1.0 Material per Unit (Grams) 500 300 600 800