A company produces two products, E and F, in batches of 100 units. The production and cost data are:

Product E:

Contribution margin per batch $450

Machine set ups needed per batch 25

Product F:

Contribution margin per batch $340

Machine set ups needed per batch 20

The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the differential profit from producing product E instead of product F for the year?

1. $216,000
2. $204,000
3. $12,000
4. $54,000