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Limited Resources Assume Fender produces only three guitars: the Stratocaster, Telecaster, and Jaguar. A limitation of 960 labor hours per week prevents Fender from meeting

Limited Resources Assume Fender produces only three guitars: the Stratocaster, Telecaster, and Jaguar. A limitation of 960 labor hours per week prevents Fender from meeting the sales demand for these products. Product information is as follows:

Stratocaster Telecaster Jaguar
Unit selling price $1,200 $900 $1,400
Unit variable costs (630) (450) (850)
Unit contribution margin $570 $450 $550
Labor hours per unit 15 10 20

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 per Unit Highest Contribution per Labor Hour
AnswerJaguarStatocasterTelecaster AnswerJaguarStatocasterTelecaster AnswerJaguarStatocasterTelecaster
Labor hours available Answer Answer Answer
Labor hours per unit Answer Answer Answer
Weekly production Answer Answer Answer
Unit contribution margin Answer Answer Answer
Weekly contribution Answer Answer Answer

Determine the opportunity cost the company will incur if management requires the weekly production of 15 Jaguars. Hint: You want to maximize short-run profit. Think about which guitar is most profitable. $Answer

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