Team Production Produces Two Models of Tailgating Tents Containing Sports

question 49

Multiple Choice

Team Production produces two models of tailgating tents containing sports logos: NCAA and NFL. Information regarding these products for May follows: $\begin{array}{lrr}&NCAA&NFL\\\text { Number of units }&3,000&7,000\\\text { Sales revenue } & \$ 120,000 & \$ 140,000 \\\text { Variable costs } & 60,000 & 42,000 \\\text { Fixed costs } & 24,000 & 50,000\\\text { Profit } & \$ 36,000 & \$ 48,000 \\\text { Yards of canvas per tent } & 22 & 14 \\\text { Contribution margin per unit } & \$ 20 & \$ 14\end{array}$ Due to increased demand of canvas in the market, Team Productions can obtain only 42,000 yards of canvas per month. The company can sell as many tents as it can produce of either model. How many NFL tents should the company produce in May considering the constraint?

• A) 0 NFL tents
• B) 3,000 NFL tents
• C) 1,909 NFL tents
• D) 1,500 NFL tents

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Definitions:

Gain on Sale of Investment

The profit realized from selling an investment for more than its purchase cost.

Fair Value

The estimated market value of an asset or liability based on current prices in an open and competitive market.

Equity Securities

Financial instruments that represent ownership in a company, such as stocks, entitling holders to dividends and capital gains.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.