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T&G Co. manufactures three types of computer desks. The income statement for the three products and the whole company is shown below: Product A Product

T&G Co. manufactures three types of computer desks. The income statement for the three products and the whole company is shown below:

Product A Product B Product C Total
Sales $75,000 $95,000 $105,000 $275,000
Variable costs 40,000 60,000 95,000 195,000
Fixed costs 22,400 16,000 16,000 54,400
Total costs 62,400 76,000 111,000 249,400
Operating income (loss) $12,600 $19,000 $(6,000 ) $25,600

The company produces 1,000 units of each product. The companys capacity is 17,000 machine hours. The machine hours for each product are 7 hours for Product A, 5 hours for Product B, and 5 hours for Product C. Fixed costs are allocated based on machine hours.

a) The company has a contract that requires it to supply 430 units of each product to a customer. The total market demand for a single product is limited to 1,500 units. How many units of each product should the company manufacture to maximize its total contribution margin including the contract?

T&G Co. should manufacture
Product A

units
Product B

units
Product C

units

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