Question
Mountaineer Products manufactures two types of tents: SingleWall and DoubleWall. Selected data related to each type of tent is as follows: SingleWall DoubleWall Sales price
Mountaineer Products manufactures two types of tents: SingleWall and DoubleWall. Selected data related to each type of tent is as follows:
|
| SingleWall |
| DoubleWall |
| Sales price | $350 |
| $275 |
| Direct materials | 25 |
| 52 |
| Direct labor | 20 |
| 39 |
| Variable overhead | 17 |
| 10 |
| Direct labor hours | 6 |
| 3 |
Total fixed manufacturing overhead is $150,000. Most of the manufacturing process is done by workers. For the upcoming year, there is a maximum of 21,000 direct labor hours available. Management believes there is sufficient demand for 3,000 SingleWall and 4,000 DoubleWall tents each year.
At the optimum solution, what is the maximum total contribution margin if there is unlimited demand for DoubleWall and SingleWall tents?
| a. | $1,038,000 |
| b. | $1,008,000 |
| c. d. | $1,218,000 $1,128,000 |
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