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A company produces three products, and is currently facing a labor shortage; only 3,500 hours are available this month. The selling prices, costs, labor requirements,

A company produces three products, and is currently facing a labor shortage; only 3,500 hours are available this month. The selling prices, costs, labor requirements, and demand for the three products are as follows:

Product A Product B Product C
Sales price $ 64.00 $ 36.00 $ 47.00
Variable cost per unit $ 52.00 $ 21.00 $ 40.00
Direct labor hours per unit 1.1 3.3 1.9
Demand (units) 1,500 2,400 1,500

Required:

  1. In what order should the company prioritize production of the products?
  2. How many of each product should be produced during the labor shortage to maximize profit?
  3. What is the total contribution margin if production is prioritized according to its limited resources?

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