A company sells two products with information as follows:
$\begin{array}{|l|c|c|}
\hline & \text { A } & \text { B } \
\hline \text { Price per unit } & \$ 10.00 & \$ 16.00 \
\hline \text { Variable cost per unit } & \$ 8.00 & \$ 11.00 \
\hline
\end{array}$

Products are made by machine. 4 units of Product A can be made with one machine hour and 2 units of Product B can be made with one machine hour. If there are no constraints on production or sales of either product, then the company should emphasize sales of Product B.

Question

A company sells two products with information as follows:
 $\begin{array}{|l|c|c|}
\hline & \text { A } & \text { B } \
\hline \text { Price per unit } & \$ 10.00 & \$ 16.00 \
\hline \text { Variable cost per unit } & \$ 8.00 & \$ 11.00 \
\hline
\end{array}$
 
Products are made by machine. 4 units of Product A can be made with one machine hour and 2 units of Product B can be made with one machine hour. If there are no constraints on production or sales of either product, then the company should emphasize sales of Product B.

Quizplus · Accepted Answer

Product B has a higher contribution margin per machine hour than Product A.

A Company Sells Two Products with Information as Follows Products Are Made by Machine