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STR Enterprise has the following production planned for the next two months. The figures reflect the full capacity level of operations. Planned output is equal
STR Enterprise has the following production planned for the next two months. The figures reflect the full capacity level of operations. Planned output is equal to the maximum demand per product Product X RM per unit 150 Y RM per unit 200 z RM per unit 150 T RM per unit 130 Selling price Raw material cost 24 56 22 40 Direct labor cost 60 80 30 20 Variable overhead cost 24 18 24 18 Contribution margin per unit Planned output 42 300 46 125 74 240 52 400 Direct labor hours per unit 6 8 3 2 It has now been identified that labor hours available in the next two months will be limited to 3,800 hours. Required: a) Calculate contribution margin per direct labor hour. (4 marks) b) Calculate total contribution margin earned for the optimal mix. (6 marks) (Total:10 Marks)
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