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What incremental benefit of obtaining additional labor hours

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Reference no: EM132520751

Butch Master, produces two types of Hammers with lifetime warranties. The industrial hammer requires 2.4 labor hours and the residential hammer requires 1.1 labor hours. The company has only 800 available labor hours per week. The company can sell all it can produce of either product.

                               Industrial                       Residential

Selling price                    $360                            $210

Variable costs                      220                          150

Contribution margin                $140                      $ 60

Question a) Which hammer(s) should the company sell? and why?

Question b) What would be the incremental benefit of obtaining 200 additional labor hours?

Reference no: EM132520751

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