Exercise 4-18

Dvorak Music produces two durable music stands:

		Stand A		Stand B
Selling price		$110			$100
Less variable costs		50			64
Contribution margin		$60			$36

Stand A requires 6 labor hours and stand B requires 3 labor hours. The company has only 350 available labor hours per week. Further, the company can sell all it can produce of either product.

Which stand(s) should the company produce? The company should produce Stand BStand ABoth stands.

What would be the incremental benefit of obtaining 15 additional labor hours?

Incremental benefit

$