The Garrison Company Manufactures Two Products: Oxy Cleaner and Sonic

question 43

Multiple Choice

The Garrison Company manufactures two products: Oxy Cleaner and Sonic Cleaner. The costs and revenues are as follows:
$$\begin{array} { l r r } & \text { Oxy } & \text { Sonic } \\& \text { Clearner } & \text { Clearner } \\\text { Sales Price } & \$ 75 & \$ 44 \\\text { Variable cost per unit } & 40 & 21\end{array}$$
Total demand for Oxy is 10,000 units and for Sonic is 6,000 units. Machine time is a scarce resource. During the year, 50,000 machine hours are available. Oxy requires 4 machine hours per unit, while Sonic requires 2.5 machine hours per unit.
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What is the maximum contribution margin Garrison can achieve during a year?

• A) $444,250.
• B) $1,014,000.
• C) $488,000.
• D) $855,500.

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Definitions:

Sales Agreement

A contract between a buyer and seller outlining the terms and conditions of a sale of goods or services.

Liability

The state of being legally responsible for something, often referring to financial obligations incurred through actions or by contract.

Lemon-Law

Legislation that offers remedies to consumers for products, especially vehicles, that fail to meet standards of quality and performance after multiple repair attempts.

Arbitration Panel

A group of one or more independent persons appointed to resolve a dispute in arbitration, rather than through court litigation.