Foster Corporation Produces Two Products-P and Q

question 54

Multiple Choice

Foster Corporation produces two products-P and Q. P sells for $4.00 per unit; Q sells for $5.25 per unit. Variable costs for P and Q are respectively, $2.50 and $3.09. There are 3 570 direct labour hours per month available for producing the two products. Product P requires 3 direct labour hours per unit and Product Q requires 4.5 direct labour hours per unit. The company can sell as many of either product as it can produce. What is the maximum monthly contribution margin that Foster can generate under the circumstances? (Please round to nearest whole dollar.)

• A)$1 785
• B)$2 567
• C)$1 714
• D)$1 650

---

Definitions:

Ethical Issues

Moral challenges facing individuals or organizations, often involving decisions about right and wrong behavior in complex and varying contexts.

Evaluation Stage

A phase in various processes where the outcomes or conditions are assessed to make judgments about value, quality, or importance.

Ethical Dilemmas

Situations in which a difficult choice has to be made between two or more morally correct courses of action that are in conflict.

Stakeholders

Individuals or entities that have an interest in the decisions and activities of an organization due to the potential impact on them.