Reference no: EM132811796

Question - EGB Ltd. produces two products, lawn mowers and power washers. Lawn mowers have a unit contribution margin of $75, and power washers have a unit contribution margin of $55. The demand for lawn mowers exceeds their production capacity, which is limited by available direct labour and machine hours. The maximum demand for power washers is 300 per week. Management desires that the product mix should maximize the weekly contribution toward fixed costs and profits. Direct manufacturing labour is limited to 600 hours a week and 400 hours is all that the company's outdated machines can run a week. The lawn mowers require 1.5 hours of labour and 1 machine hour. Power washers require 2.5 labour hours and 2 machine hours.

Determine the product mix based on the information provided, how much contribution margin would change if EGB added 1 more hour of machine hours, how much slack is available (if any) with the labour and machine hours.