The management of Coppler Corporation has provided the following data concerning its two products: The constrained resource is a particular machine that is available for 9,700 minutes each month.
-What is the maximum contribution margin the company can earn per month?
A)$22,568
B)$25,676
C)$24,010
D)$35,000

Question

The management of Coppler Corporation has provided the following data concerning its two products:   The constrained resource is a particular machine that is available for 9,700 minutes each month.
-What is the maximum contribution margin the company can earn per month?
A)$22,568 
B)$25,676 
C)$24,010 
D)$35,000

Quizplus · Accepted Answer

To find the maximum contribution margin, we need to find the product with the highest contribution margin per unit and then multiply it by the number of units sold. 
From the given information, Product A has a contribution margin per unit of $10 and can sell a maximum of 2,000 units. Product B has a contribution margin per unit of $12 and can sell a maximum of 1,500 units. 
To maximize the contribution margin, we should sell the maximum number of units of Product B, which is 1,500 units. 
Therefore, the maximum contribution margin per month is:
Contribution margin per unit (Product B) × number of units sold (1,500) 
= $12 × 1,500 
= $18,000 
Adding the fixed costs of $7,676, the total revenue that the company can earn per month is $25,676.

The Management of Coppler Corporation Has Provided the Following Data