2C1I CERVINE CORPORATION MAKES MOTORS FOR VARIOUS PRODUCTS. OPERATIN...
213.
CSO: 2C1c
LOS: 2C1i
Cervine Corporation makes motors for various products. Operating data and unit cost
information for its products are presented below.
Product A
Product B
Annual unit capacity
10,000
20,000
Annual unit demand
10,000
20,000
Selling price
$100
$80
Variable manufacturing cost
53
45
Fixed manufacturing cost
10
10
Variable selling & administrative
10
11
Fixed selling & administrative
5
4
Fixed other administrative
2
-
Unit operating profit
$ 20
$10
Machine hours per unit
2.0
1.5
Cervine has 40,000 productive machine hours available. What is the maximum total
contribution margin that Cervine can generate in the coming year?
a.
$665,000.
b.
$689,992.
c.
$850,000.
d.
$980,000.