Question
River Plate Company makes four products in a single facility. These products have the following unit product costs: ProductsABCDDirect Materials$14.30$10.20$11.00$10.60Direct Labor$19.40$27.40$33.60$40.40Variable manufacturing overhead$4.30$2.70$2.60$3.20Fixed manufacturing overhead$26.50$34.80$26.60$37.20Unit
River Plate Company makes four products in a single facility. These products have the following unit product costs:
ProductsABCDDirect Materials$14.30$10.20$11.00$10.60Direct Labor$19.40$27.40$33.60$40.40Variable manufacturing overhead$4.30$2.70$2.60$3.20Fixed manufacturing overhead$26.50$34.80$26.60$37.20Unit product cost$64.50$75.10$73.80$91.40
Additional data concerning these products are listed below.
ProductsABCDProcessing minutes per unit3.85.34.33.4Selling price per unit$76.10$93.50$87.40$104.20Variable selling cost per unit$2.20$1.20$3.30$1.60Monthly demand in units4,0004,0003,0002,000
The processing machines are potentially the constraint in the production facility. A total of 53,600 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
What's the maximum contribution margin that can be generated?
$559,100
$537,624
$535,478
$562,403
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