Range Rider Industries manufactures chairs and tables that are in high demand by local office furniture stores.Following is information for each of these products: Range Rider has 900 machine hours available each month.The demand for chairs is 560
A)$6,744
B)$6,522
C)$6,182
D)$10,240

Question

Range Rider Industries manufactures chairs and tables that are in high demand by local office furniture stores.Following is information for each of these products:  Range Rider has 900 machine hours available each month.The demand for chairs is 560
A)$6,744 
B)$6,522 
C)$6,182 
D)$10,240

Quizplus · Accepted Answer

To determine the best choice, we need to calculate the contribution margin per unit for each product.

For chairs: 
Revenue per unit = $60 
Variable cost per unit = $20 
Contribution margin per unit = $40

For tables: 
Revenue per unit = $220 
Variable cost per unit = $150 
Contribution margin per unit = $70

Next, we need to calculate how many units of each product can be produced within the 900 machine hours available.

For chairs: 
Machine hours per unit = 1.5 
Units that can be produced = 600 (900/1.5)

For tables: 
Machine hours per unit = 4 
Units that can be produced = 225 (900/4)

Therefore, the total contribution margin for chairs is: 
600 units x $40 contribution margin per unit = $24,000

And the total contribution margin for tables is: 
225 units x $70 contribution margin per unit = $15,750

Based on these calculations, the best choice is to produce 600 chairs and no tables. This will result in a total contribution margin of $24,000.

Therefore, the answer is B.

Range Rider Industries Manufactures Chairs and Tables That Are in High