Mallory Manufacturing produces thermal tents and sleeping bags. The company's products are in high demand due to the quality and durability of the products. Mallory estimates it could sell 600 tents per month and 600 sleeping bags per month. Following is information for each of these products:
|
|
Tent
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Sleeping Bag
|
|
Selling price per item
|
$68.00
|
$43.00
|
|
Variable cost per item
|
49.50
|
29.00
|
|
Contribution margin per item
|
$18.50
|
$14.00
|
|
Machine hours per item
|
1.1
|
.8
|
Mallory has 800 machine hours available each month. If Mallory allocates its production capacity between the tents and sleeping bags so that it maximizes the company's contribution margin, what will the contribution margin be?