Maximizing Contribution Margin Given a Limited Resource Soft Mattress, Inc., produces both a queen- and...
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Accounting
Maximizing Contribution Margin Given a Limited Resource
Soft Mattress, Inc., produces both a queen- and a king-size soft mattress. Selected data related to each product follow:
Queen King
Sales Price $525.00 $635.00
Direct Materials 350.00 365.00
Direct Labor 75.00 85.00
Variable Overhead 25.00 35.00
Stuffing Hours per mattress 1 3
Only two employees are trained to stuff the secret soft ingredient into the mattresses. They have a maximum of 4,000 total stuffing hours per year.
Required:
A. What is the contribution margin per limited resource for each type of bed? ( I was able to answer)
Contribution Margin
Queen Bed 75 per stuffing hour
King Beds 50 per stuffing hour
B. Assuming that demand is not a constraint, how many queen- and king-size mattresses should be produced by Soft Mattress, Inc. considering available stuffing hours as a constraint resource? If no units of a product should be produced, enter "0"
Production
Queen-Size Mattresses ? units
King
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