Limited Resources Assume Fender produces only three guitars: the Stratocaster, Dreadnought and Telecaster. A limitation of 720 labor hours per week prevents Fender from meeting the sales demand for these products. Product information is as follows: Stratocaster Dreadnought Telecaster Unit selling price $672 $420 $882 Unit variable costs (420) (210) (756) Unit contribution margin $252 $210 $126 Labor hours per unit 36 24 36 Required Determine the weekly contribution from each product when total labor hours are allocated to the product with the highest. 1. Unit selling price. 2. Unit contribution margin. 3. Contribution per labor hour. (Hint: Each situation is independent of the others.) Highest Unit Selling Price Highest Contribution Highest Contribution per Unit per Labor Hour Labor hours available Labor hours per unit Weekly production Unit contribution margin $ Weekly contribution $ $ $ $ $ Determine the opportunity cost the company will incur if management requires the weekly production of 20 Telecasters. Hint: You want to maximize short-run profit. Think about which guitar is most profitable.