“65. Consider the following production and cost data for two products, L and C: Product L Product C Contribution margin per unit $120 $112 Machine set-ups needed per unit 10 set-ups 8 set-ups The company can perform 60,000 machine set-ups each period and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period? a. $720,000. b. $840,000. c. $780,000. d. $1,560,000.”,”2Contribution Margin per Machine set-ups: Product L = 120/10 = $12/setup Product C = 112/8 = $14/setupProduct C can produce the largest possible contribution margin because its CM/set-ups is $14, compared to Product L’s $12.Product C:Machine set-ups each period = 60,000 = 7,500 unitsMachine set-ups needed per unit 8CM = Number of Units x CM $ per unitContribution Margin = 7,500 x $112 = $840
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