Bath Company has a limited amount of direct material available for products 111 and 222.Each unit of 111 has a contribution margin of $5 and each unit of 222 has a contribution margin of $25.A unit of 222 uses four times as much direct material as a unit of 111.What is Bath's most profitable sales mix,assuming there is unlimited demand for either product?
A) Make all 222.
B) Make all 111.
C) Make equal number of units of 111 and 222.
D) Make four times as many 111 as 222.
E) Make four times as many 222 as 111.

Question

Quizplus · Accepted Answer

Contribution margin of 1 unit of 222 = 1 x $25 = $25
Contribution margin of 4 units of 111 = 4 x $5 = $20

Bath Company Has a Limited Amount of Direct Material Available