Hello,

Can someone with Managerial Accounting Experience explain the step-by-step process to solve this problem? I know to find the Contribution Margin by subtracting the Sales Price (-) Variable Cost = Contribution Margin. After this step, I'm lost.

Mac manufactures 2 products: pants and shirts. Pants have a selling price of $60 and a variable cost per unit of $40. Shirts have a selling price of $50 and a variable cost per unit of $30. Pants require 0.20 machine-hours per unit, whereas shirts require 0.25 machine-hours per unit. The company's fixed costs average $200,000 per month. The monthly demand for pants is 14,000 units, whereas the monthly demand for shirts is 15,000 units. If the company has only 3,000 machine hours (MH) available per month, the maximum amount of operating income it can earn is $?