15-12 - 15-12 15-25(continued(1(continued Lee should...

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15-12 15-25 (continued) (1) (continued) Lee should produce 3,000 floor lamps (which will use 9,000 machine hours and leave 2,400 machine hours for the production of desk lamps) and 1,200 (2,400 hours  ÷  2 hours per floor lamp) desk lamps. The total contribution margin earned per month is: 3,000 floor lamps @ $15.00 $45,000 1,200 desk lamps @ $ 6.00 7,200 Total $52,200 (2) Leasing an additional machine providing 360 more hours per month can provide an increase in contribution margin by producing 180 (360 hours ÷  2 machine hours per lamp) more desk lamps (no more floor lamps could be sold). The increase in total contribution margin from the extra desk lamps would be 360 machine hours x $3 contribution margin per machine hour = $1,080 or 180 floor lamps x $6 contribution margin per lamp = $1,080 The company would not want to pay more than $1,080 per month to lease
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