Hari's Fish House can produce and sell only one of the following two products: $$\begin{array} { l c c }
& \begin{array} { c }
\text { Fryer } \
\text { Fried catfish }
\end{array} & \begin{array} { c }
\text { Contribution } \
\text { Margin Per Unit }
\end{array} \
\text { Fried catfish } & 3 & \$ 15 \
\text { Fried grouper } & 4 & \$ 16
\end{array}$$ The company has fryer capacity of 12,000 hours.How much will the contribution margin be if it produces only the most profitable product?
A)$48,000
B)$36,000
C)$60,000
D)$12,000

Question

Hari's Fish House can produce and sell only one of the following two products: $$\begin{array} { l c c } 
& \begin{array} { c } 
\text { Fryer } \
\text { Fried catfish }
\end{array} & \begin{array} { c } 
\text { Contribution } \
\text { Margin Per Unit }
\end{array} \
\text { Fried catfish } & 3 & \$ 15 \
\text { Fried grouper } & 4 & \$ 16
\end{array}$$ The company has fryer capacity of 12,000 hours.How much will the contribution margin be if it produces only the most profitable product?
A)$48,000
B)$36,000
C)$60,000
D)$12,000

Quizplus · Accepted Answer

The contribution margin per fryer hour for fried catfish is $15/3 = $5, and for fried grouper is $16/4 = $4. Fried catfish is more profitable per fryer hour. With 12,000 fryer hours, the contribution margin will be 12,000 hours * $5 = $60,000.

Hari's Fish House Can Produce and Sell Only One of the Following