Maximizing Contribution Margin Given a Limited Resource

Soft Mattress, Inc., produces both a queen- and a king-size soft mattress. Selected data related to each product follow:

Queen King

Sales Price $525.00 $635.00

Direct Materials 350.00 365.00

Direct Labor 75.00 85.00

Variable Overhead 25.00 35.00

Stuffing Hours per mattress 1 3

Only two employees are trained to stuff the secret soft ingredient into the mattresses. They have a maximum of 4,000 total stuffing hours per year.

Required:

A. What is the contribution margin per limited resource for each type of bed? ( I was able to answer)

Contribution Margin

Queen Bed 75 per stuffing hour

King Beds 50 per stuffing hour

B. Assuming that demand is not a constraint, how many queen- and king-size mattresses should be produced by Soft Mattress, Inc. considering available stuffing hours as a constraint resource? If no units of a product should be produced, enter "0"

Production

Queen-Size Mattresses ? units

King