Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively.Only 500 labor hours and 300 machine hours are available for production. Time requirements to produce one unit of A and B are as follows:
What is the constraint on machine hours for Heft Company?
A) 1A + 4B £ 500
B) 5A + 2B £ 500
C) 1A + 4B £ 300
D) 40A + 30B £ 500

Question

Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively.Only 500 labor hours and 300 machine hours are available for production. Time requirements to produce one unit of A and B are as follows:
 What is the constraint on machine hours for Heft Company?
A) 1A + 4B £ 500 
B) 5A + 2B £ 500 
C) 1A + 4B £ 300 
D) 40A + 30B £ 500

Quizplus · Accepted Answer

The constraint on machine hours is given by the total available machine hours, which is 300. The time requirement for one unit of A on the machine is 3 hours and for one unit of B is 2 hours. So, the constraint can be written as: 3A + 2B ≤ 300. Rearranging this inequality, we get: A ≤ (300 - 2B)/3, which means that the maximum number of units of A that can be produced is limited by the machine hours available for producing B. Therefore, the correct constraint on machine hours is 1A + 4B ≤ 300, which is option C.

Heft Company Produces a and B with Contribution Margins Per