Todd Corporation Produces Two Products, P and Q

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 respectively, $3 and $4.50. 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 as many of either product as it can produce. 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) $1,500
D) $2,250