Question
Wildhorse Manufacturing produces thermal tents and sleeping bags. The company's products are in high demand due to the quality and durability of the products. Wildhorse
Wildhorse Manufacturing produces thermal tents and sleeping bags. The company's products are in high demand due to the quality and durability of the products. Wildhorse 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 | $90.00 | $65.00 | ||
Variable cost per item | 77.00 | 50.00 | ||
Contribution margin per item | $13.00 | $15.00 | ||
Machine hours per item | 1.00 | 1.00 |
Wildhorse has 1012 machine hours available each month. In order to maximize the company's total contribution margin, how should Mallory allocate its production capacity between the tents and sleeping bags?
600 sleeping bags and 412 tents
600 tents and 412 sleeping bags
1012 sleeping bags and 0 tents
1012 tents and 0 sleeping bags.
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