Question
Stone Manufacturing Company makes three different levels of an electronic component: Regular, Super, and Deluxe. All three are made by the same employees. Information for
Stone Manufacturing Company makes three different levels of an electronic component: Regular, Super, and Deluxe. All three are made by the same employees.
Information for the three components is given below:
Regular Super Deluxe
Selling Price per unit 26 22 34
Variable Costs per unit
Direct Material 5 6 4
Direct Labor ($24 per hour) 6 3 12
Variable Manufacturing Overhead 2 3 4
Variable Marketing 1 2 2
all three components have become very popular, and demand has become so great that the company can sell all the components it can make. However, the popularity has also brought competition for workers, so it is difficult to find and retain labor. The company is unwilling to raise its hourly wage, so it now has only 280 hours of labor available.
. In this situation, what is the greatest amount of contribution margin the company could make?
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