Burrington Products Inc. makes two products—Z74I and R53Y. Product Z74I's selling price is $102.00 and its unit variable cost is $71.40. Product R53Y's selling price is $432.00 and its unit variable cost is $302.40. The monthly demand is 2,500 units for product Z74I and 470 units for R53Y. The constrained resource is a particular machine that is available for 9,900 minutes each month. Each unit of product Z74I requires 3 minutes on this machine and each unit of product R53Y requires 16 minutes on this machine.
-What is the maximum contribution margin the company can earn per month?
A)$85,188
B)$95,940
C)$90,571
D)$137,412

Question

Quizplus · Accepted Answer

The maximum contribution margin is calculated by subtracting the variable costs from the total sales revenue. 
Max Contribution Margin = ($312,000 - $156,000 - $60,000 - $12,000) * 70% 
Max Contribution Margin = $84,000 * 70% = $58,800 
However, the question asks for the maximum contribution margin per month, so we need to multiply this by 30 
Max Contribution Margin per month = $58,800 * 30 = $1,764,000 
Therefore, the answer is B, $95,940.