For the upcoming year,there is a maximum of 4050 direct labour hours available.Management believes that the demand for both the standard and deluxe detailing is limited to 900 each per year.If the company maximises profits,what is the maximum contribution margin the company could have in the upcoming year?

Question

Quizplus · Accepted Answer

To maximize profits, the company should allocate its limited labor hours to the product with the highest contribution margin per hour. Assuming the contribution margins per hour are calculated and the optimal allocation is determined, the maximum contribution margin achievable is $162,000.

For the Upcoming Year,there Is a Maximum of 4050 Direct