Managerial Accounting

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Rosey Partner: Maximum Contribution Margin Limited Machine Hours

MGRACT-ULHKER

Rosey Partners makes three products that are all in high demand. The costs per unit for the most recent period are shown below.

Model X Model Y Model Z
Sales price \$160 \$180 \$200
Direct materials \$60 \$60 \$60
Variable labor and overhead \$30 \$30 \$40
Fixed overhead \$40 \$40 \$40
Machine hours used 3.5 4 2.5



If the maximum that you can run the machine is 600 hours per month, what is the maximum contribution margin possible (assuming the market will buy all that you can make)?