Marshall Company has only 30,000 hours of machine time each month to manufacture its two products.Product X has a contribution margin of $60,and Product Y has a contribution margin of $72.Product X requires 6 hours of machine time,and Product Y requires 10 hours of machine time.If Marshall Company wants to dedicate 85 percent of its machine time to the product that will provide the most income,the company will have a total contribution margin of
A)$216,000
B)$228,600.
C)$287,400
D)$300,000

Question

Quizplus · Accepted Answer

Product Y has a higher contribution margin per hour ($72/10 = $7.2) compared to Product X ($60/6 = $10). Therefore, dedicate 85% of machine time to Product X. 85% of 30,000 hours is 25,500 hours, allowing for 4,250 units of Product X (25,500/6). The remaining 4,500 hours are for Product Y, allowing for 450 units (4,500/10). Total contribution margin: (4,250 * $60) + (450 * $72) = $287,400.

Marshall Company Has Only 30,000 Hours of Machine Time Each