Wood carving corporation manufactures three products. because of a recent lack of skilled wood carvers, the corporation has had a shortage of available labor hours. the following per unit data relates to the three products of the corporation: letter openers elvis statues candle holders selling price $ 30 $ 80 $ 42 variable cost $ 20 $ 40 $ 20 labor hours required 1 6 2 assume that wood carving only has 1,800 labor hours available next month. also assume that wood carving can only sell 800 units of each product in a given month. what is the maximum amount of contribution margin that wood carving can generate next month given this labor hour shortage? multiple choice $12,000 $19,000 $19,600 $19,800

$19,600

Prod 1    Prod 2Prod 3Income Statement

$ 30      $ 80$ 42,0Selling Price

-$ 20    -$ 40-$ 20,0Variable Cost

$ 10      $ 40         $ 22,0Contributing Margin    

     1              6               2Labour Hours  

    10      7        11Contr. Margin/Hours  

200     -    800    Quantity

200              -    1600Labour Hours Shortage

$ 2,000      -    $ 17,600  

Explanation:

To maximize the production over the shortage of hours it's necessary  

to calculate how much it's the Contribution Marging per hour.

Contr. Margin/Hours  Prod1 -> $10,  Prod2 -> $7,  Prod3 -> $11

Once you have the number you produce as much as you can of the product with the higher Contribution Margin per hour.

As it's detailed: 800 Units of Prod3 and 200 Units of Prod1, it totalized 1.800 hours and $19,600 of Contribution Margin.

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