1.Nevada Company manufactures and sells office chairs in two models: Executive and Deluxe. Product information is provided below.

Deluxe Executive

Unit selling price $150 $500

Unit variable costs 90 250

Unit contribution margin $ 60 $250

Machine hours required per unit 2 10

Nevada has 10,000 machine hours available each month for producing these two products. The demand for both products is such that Nevada can sell as many units of either product as it can produce. What is the maximum amount of contribution margin that the company can obtain from the available machine hours next month?

1. $250,000.
2. $600,000.
3. $300,000.
4. $2,500,000.

2. Referring to the previous problem, what if all of the facts were the same, except there was a limit to customer demand of 3,250 units of the Deluxe and 400 units of Executive. What is the maximum contribution margin that the company can obtain from the available machine hours given the limit to the demand?

1. $282,500
2. $300,000
3. $195,000
4. $280,000