Ring Company manufactures two tables, Small and Large. The following data is available:
Small Large
- Selling price per unit $100 $210
- Variable cost per unit $68 $138
- Machine hours required 3.2 10
- Total fixed costs $9,600
Ring Company can sell a maximum of 1,000 units of each size of table. Machine hour capacity is 8,000 hours per year.
Required:
a. Which table has the higher contribution margin per unit?
b. Which table has the higher contribution margin per hour?
c. How many tables of each size should be produced to maximize income, and what is the maximum income?