Todd Corporation Produces Two Products,P and Q

question 26

Multiple Choice

Todd Corporation produces two products,P and Q.P sells for $5 per unit; Q sells for $6.50 per unit.Variable costs for P and Q are $3 and $4.50,respectively.There are 4,300 direct labor hours per month available for producing the two products.Product P requires 4 direct labor hours per unit and Product Q requires 5 direct labor hours per unit.The company can sell up to 900 units of each kind per month.What is the maximum monthly contribution margin that Todd can generate under the circumstances? Round to nearest whole dollar.

• A)$2,150
• B)$1,505
• C)$2,080
• D)$1,500

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Definitions:

Monopoly Position

A situation in which a single company or entity exclusively controls a significant portion of the market for a particular product or service.

Trade Secrets

Confidential business information which provides an enterprise a competitive edge, and which is protected from disclosure by law.

Fast-Second Strategy

a business approach where companies wait to observe the successes and failures of innovators before entering the market with a more refined and potentially more competitive offer.