Question
Sunland Manufacturing produces thermal tents and sleeping bags. The companys products are in high demand due to the quality and durability of the products. Sunland
Sunland Manufacturing produces thermal tents and sleeping bags. The companys products are in high demand due to the quality and durability of the products. Sunland estimates it could sell 600 tents per month and 600 sleeping bags per month. Following is information for each of these products:
Tent | Sleeping Bag | |||
---|---|---|---|---|
Selling price per item | $76.00 | $51.00 | ||
Variable cost per item | 65.00 | 39.00 | ||
Contribution margin per item | $11.00 | $12.00 | ||
Machine hours per item | 1.00 | 1.00 |
Sunland has 880 machine hours available each month. In order to maximize the companys total contribution margin, how should Mallory allocate its production capacity between the tents and sleeping bags?
880 sleeping bags and 0 tents
600 sleeping bags and 280 tents
880 tents and 0 sleeping bags.
600 tents and 280 sleeping bags
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