Foster Corporation Produces Two Products-P and Q

question 28

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 labor hours per month available for producing the two products. Product P requires 3 direct labor hours per unit and Product Q requires 4.5 direct labor 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) $1,714
• C) $1,650
• D) $2,567

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Definitions:

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Specific pieces of information that are true, verified, and indisputable.

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A situation where an individual is able to persuade another's decisions due to the relationship between the two parties, often leading to unjust or unnatural outcomes.

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The undue force or stress applied, mentally or physically, which exceeds normal or acceptable limits.

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A legally recognized relationship imposing a duty on one party to take care of another, reducing risk of harm.