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Compute the total contribution margin

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Question - France Company produces two products (A & B) that use the same material input. A uses 2 pounds of the material for every unit produced, and B uses 5 pounds. Currently, France has 16,000 pounds of the material in inventory. All of the material is imported. For the coming year, France plans to import an additional 8,000 pounds to produce 2,000 units of A and 4,000 units of B. The unit contribution margin is P30 for A & P60 for B. France company has received word that the source of the material has been shut down by embargo. Consequently, the company will not be able to import the 8,000 pounds it planned to use in the coming year's production. There is no other source of the material. Compute the total contribution margin that the company would earn if it could manufacture 2,000 units of A and 4,000 units of B.

Reference no: EM133179863

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