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:

Business Message

Communication conveyed through various channels for professional purposes.

Conversational

A style of communication that is informal, natural, and similar to everyday spoken language.

Formal Tone

A style of communication that is professional, impersonal, and often used in academic or professional settings.

Internal Audience

A group within an organization, such as employees or members, targeted by specific communications or information.