Magnitude 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: $\begin{array}{lcc}
& \text { Product A } & \text { Product B } \
\text { Labor hours per unit } & 5 & 2 \
\text { Machine hours per unit } & 1 & 4
\end{array}$ What is the constraint on machine hours for Magnitude Company?
A)1A + 4B ? 300
B)5A + 2B ? 500
C)1A + 4B ? 500
D)40A + 30B ? 500

Question

Magnitude 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: $\begin{array}{lcc} 
& \text { Product A } & \text { Product B } \
\text { Labor hours per unit } & 5 & 2 \
\text { Machine hours per unit } & 1 & 4
\end{array}$ What is the constraint on machine hours for Magnitude Company?
A)1A + 4B ? 300
B)5A + 2B ? 500
C)1A + 4B ? 500
D)40A + 30B ? 500

Quizplus · Accepted Answer

The constraint on machine hours is determined by the number of machine hours required to produce one unit of each product and the total available machine hours. For Product A, 1 machine hour is needed per unit, and for Product B, 4 machine hours are needed per unit. With a total of 300 machine hours available, the constraint is 1A + 4B ≤ 300.

Magnitude Company Produces a and B with Contribution Margins Per