Brooks Corporation can sell all the units it can produce of either Plain or Fancy but not both. Plain has a unit contribution margin of $72 and takes two machine hours to make and Fancy has a unit contribution margin of $90 and takes three machine hours to make. There are 2,400 machine hours available to manufacture a product. What should Brooks do?
A) Make Fancy which creates $18 more profit per unit than Plain does.
B) Make Plain which creates $6 more profit per machine hour than Fancy does.
C) Make Plain because more units can be made and sold than Fancy.
D) The same total profits exist regardless of which product is made.

Question

Quizplus · Accepted Answer

Plain generates a higher profit per machine hour ($72/2 = $36 per hour) compared to Fancy ($90/3 = $30 per hour), making it the more efficient choice in terms of machine hour utilization.

Brooks Corporation Can Sell All the Units It Can Produce