Classic Cars produces regular and luxury model toy cars. The regular model is sold at...
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Accounting
Classic Cars produces regular and luxury model toy cars. The regular model is sold at $10 each, and the luxury model is sold at $20 each. The variable cost of making the regular model is $6 each. It costs an extra $5 to make the luxury model. It takes 8 labor hours to make 100 regular toy cars and 12 labor hours to make 100 luxury toy cars. There are 1,200 hours of labor time available for production each week. The maximum weekly sales for the regular and luxury toy cars are 5,000 and 2,000 units, respectively. Fixed production costs total $100,000 per year. All selling costs are fixed.
Required: (a) Calculate the optimal production level in number of units for each product. (b) Prepare the ledgers for both types of toy cars showing all necessary entries. (c) Compute the total contribution margin for the company.
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You can see the logs in the Dashboard.