Response to the following problem:
Schumann Company manufactures two products: Hats and Caps. The following information is available: Hats Caps Selling price per unit $21 $13 Variable cost per unit $12 $9 Labor hours per unit 3 1 Total fixed costs are $52,000 per year. Labor hour capacity is 15,000 hours per year.
Required:
A) Which product has the highest contribution margin per unit?
B) Which product has the highest contribution margin per unit in light of the production constraint?
C) Assume Schumann Company can only produce one product. Which product should be produced? What will net income be?