All Terrain Tires manufactures three different off-road ATV tires: Model A, Model B, and Model C. Plenty of market demand exists for all models. The table below reports the prices and costs per unit of each product:
Assuming that machine hours are limited (i.e., this is the constrained resource), which model is the most profitable to produce?
A) Model A
B) Model B
C) Model C
D) Model A and B would be equally profitable
E) Model B and C would be equally profitable

Question

All Terrain Tires manufactures three different off-road ATV tires: Model A, Model B, and Model C. Plenty of market demand exists for all models. The table below reports the prices and costs per unit of each product:
 Assuming that machine hours are limited (i.e., this is the constrained resource), which model is the most profitable to produce?
A) Model A 
B) Model B 
C) Model C 
D) Model A and B would be equally profitable 
E) Model B and C would be equally profitable

Quizplus · Accepted Answer

Contribution Margin per Machine hour:
 11ee472f_eee1_6d69_a6cd_431ef4706a9f_TBCB1009_00 Model A is most profitable.

All Terrain Tires Manufactures Three Different Off-Road ATV Tires: Model