Sky Mountain Bakery makes doughnuts,cupcakes,and scones that are in high demand by local restaurants and hotels.Following is information for each of these products: Sky Mountain has 2,000 machine hours available each month.Demand for each item exceeds Sky Mountain's capacity to produce the item.In order to maximize the company's total contribution margin,in what sequence should Sky Mountain fill orders for the three products?
A)Scones first,then cupcakes,then doughnuts.
B)Doughnuts first,then scones,then cupcakes.
C)Cupcakes first,then doughnuts,then scones.
D)Scones first,then doughnuts,then cupcakes.

Question

Sky Mountain Bakery makes doughnuts,cupcakes,and scones that are in high demand by local restaurants and hotels.Following is information for each of these products:  Sky Mountain has 2,000 machine hours available each month.Demand for each item exceeds Sky Mountain's capacity to produce the item.In order to maximize the company's total contribution margin,in what sequence should Sky Mountain fill orders for the three products?
A)Scones first,then cupcakes,then doughnuts. 
B)Doughnuts first,then scones,then cupcakes. 
C)Cupcakes first,then doughnuts,then scones. 
D)Scones first,then doughnuts,then cupcakes.

Quizplus · Accepted Answer

Since the company has a limited number of machine hours available, the products with the highest contribution margin per unit of machine time should be produced first. 
The contribution margin per machine hour for scones is $12.50 (50/4), for doughnuts it is $10 (50/5), and for cupcakes it is $7.50 (30/4). 
Therefore, Sky Mountain should produce scones first, followed by doughnuts, and then cupcakes to maximize its total contribution margin.

Sky Mountain Bakery Makes Doughnuts,cupcakes,and Scones That Are in High