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Metlock Co. manufactures three types of computer desks. The income statement for the three products and the whole company is shown below: Product A Product
Metlock Co. manufactures three types of computer desks. The income statement for the three products and the whole company is shown below: Product A Product B Product C Total Sales $85,000 $104,000 $135,000 $324,000 Variable costs 50,000 69,000 125,000 244,000 Fixed costs 24,500 17,500 17,500 59,500 Total costs 74,500 86,500 142,500 303,500 Operating income (loss) $10,500 $17,500 $17,500) $20,500 The company produces 1,000 units of each product. The company's capacity is 17,000 machine hours. The machine hours for each product are 7 hours for Product A, 5 hours for Product B, and 5 hours for Product C. Fixed costs are allocated based on machine hours. Suppose the company can sell unlimited quantities of any of the three products. If a customer wanted to purchase 570 units of Product C, what would the minimum sale price per unit be for this order? Minimum sale price $ per unit The company has a contract that requires it to supply 570 units of each product to a customer. The total market demand for a single product is limited to 1,500 units. How many units of each product should the company manufacture to maximize its total contribution margin including the contract? Metlock Co. should manufacture Product A units Product B units Product C units
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