The Cuthill Company manufactures two products: M1 and H1. Each product uses skilled labour, and the...

The Cuthill Company manufactures two products: M1 and H1. Each product uses skilled labour, and the total hours of skilled labour available for the following year are limited to 27274 hours. Data for each of the two products is as follows:

	M1	H1
Contribution margin per unit	$32.07	$51.07
Hours of skilled labour per unit	2.5	2.95
Maximum product demand (units)	6383	4642

What is the maximum contribution margin that can be achieved next year?

Select one:

a. $411272

b. $472164

c. $441770

d. $445509

Expert Solution

	M1	H1
Contribution margin per unit	$32.07	$51.07
Hours of skilled labour per unit	2.5	2.95
Maximum product demand (units)	6383	4642

Contribution margin per hours	$12.83	$17.31

Since the maximum contribution per hours for H1 is higher therefore first H1 will be sold to the maximum demand

HI units =	4642
total hours 4642*2.95	13,693.90

Total avaiable hours	27274
Hours to be used for M1	13,580.10
Number of M1 units =	5,432
13580/2.5

Maximum contribution =	411272
543232.07+464251.07

Ans =	$ 411,272

ekkarill92 answered 1 year ago

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