Custom Furniture Manufactures a Small Table and a Large Table

question 123

Multiple Choice

Custom Furniture manufactures a small table and a large table. The small table sells for $800, has variable costs of $520 per table, and takes eight direct labor hours to manufacture. The large table sells for $1,200, has variable costs of $720, and takes sixteen direct labor hours to manufacture. The company has a maximum of 4,800 direct labor hours per month when operating at full capacity. If there are no constraints on sales of either product, and the company could choose any proportions of product mix that they wanted, what is the maximum contribution margin the company could earn?

• A) $122,000
• B) $176,000
• C) $154,500
• D) $168,000

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Definitions:

Pollution Permits

A system where companies are given allowances to emit a certain amount of pollutants, with the option to buy or sell permits based on their needs.

Pollution Rights

Tradable permits or certificates that allow the holder to emit a specific amount of pollution; used to regulate and limit overall pollution.

Demand Curve

A visual depiction showing the connection between the cost of a product or service and how much of it is wanted over a specific time frame.

Positive Externality

A benefit that affects someone who did not choose to incur that benefit, typically associated with public goods or services, like education or vaccination.