Crystal Clear Water produces bottled and mineral water. The bottled water is sold at $1.50 per bottle, and the mineral water is sold at $2.50 per bottle. The variable cost of making the bottled water is $0.80 per bottle. It costs an extra $0.50 to make the mineral water. It takes 10 labor hours to produce 1,000 bottles of bottled water and 15 labor hours to produce 1,000 bottles of mineral water. There are 4,500 hours of labor time available for production each week. The maximum weekly sales for the bottled and mineral water are 50,000 and 20,000 bottles, respectively. Fixed production costs total $200,000 per year. All selling costs are fixed.

Required: (a) Determine the optimal production level in number of bottles for each product. (b) Prepare the ledgers for both types of water showing all necessary entries. (c) Calculate the contribution margin for each type of water.