Craftsman has the following production information available regarding its lawn mowers: If Craftsman currently has only 900 machine hours available per month for mower production, which of the two lawn mowers, Riding Mower and/or Self-Propelled Push Mower, should Craftsman produce to maximize net income (assuming all mowers produced can be sold)?
A) Riding Mower, since it has the highest unit contribution margin at $500.
B) Self-Propelled Push Mower, since it has the highest contribution margin per machine hour of $55.
C) Equal amounts of each mower will maximize net income for the company.
D) Not enough information is provided to compute the maximized net income computation.

Question

Craftsman has the following production information available regarding its lawn mowers:  If Craftsman currently has only 900 machine hours available per month for mower production, which of the two lawn mowers, Riding Mower and/or Self-Propelled Push Mower, should Craftsman produce to maximize net income (assuming all mowers produced can be sold)?
A) Riding Mower, since it has the highest unit contribution margin at $500. 
B) Self-Propelled Push Mower, since it has the highest contribution margin per machine hour of $55. 
C) Equal amounts of each mower will maximize net income for the company. 
D) Not enough information is provided to compute the maximized net income computation.

Quizplus · Accepted Answer

Craftsman should produce and sell the Self-Propelled Push Mower in this scenario since it has the highest contribution margin per unit of constrained resource (Machine Hours) - $55 per machine hour ($275/5 hrs.) vs. Riding Mower of $50 ($500/10 hrs.)

Craftsman Has the Following Production Information Available Regarding Its Lawn