Connolly Company produces two types of lamps, classic and fancy, with unit contribution margins of $13 and $21, respectively.Each lamp must spend time on a special machine.The firm owns four machines that together provide 18,000 hours of machine time per year.The classic lamp requires 0.20 hours of machine time, the fancy lamp requires 0.50 hours of machine time.
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How many of each type of lamp must be sold to optimize total contribution margin?
A) 18,000 classic lamps; 0 fancy lamps
B) 0 classic lamps; 30,000 fancy lamps
C) 10,000 classic lamps; 10,000 fancy lamps
D) 0 classic lamps; 9,000 fancy lamps
E) 90,000 classic lamps; 0 fancy lamps

Question

Connolly Company produces two types of lamps, classic and fancy, with unit contribution margins of $13 and $21, respectively.Each lamp must spend time on a special machine.The firm owns four machines that together provide 18,000 hours of machine time per year.The classic lamp requires 0.20 hours of machine time, the fancy lamp requires 0.50 hours of machine time. 
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How many of each type of lamp must be sold to optimize total contribution margin?
A) 18,000 classic lamps; 0 fancy lamps
B) 0 classic lamps; 30,000 fancy lamps
C) 10,000 classic lamps; 10,000 fancy lamps
D) 0 classic lamps; 9,000 fancy lamps
E) 90,000 classic lamps; 0 fancy lamps

Quizplus · Accepted Answer

11ea8a4c_48b7_215c_a0e6_dfcf585f52d4_TB5550_00 Since classic lamps have a contribution margin per hour of machine time of $65 (as opposed to fancy lamps $42), all machine time should go to the production of classic lamps.
 
Number of classic lamps = 18,000 / 0.20 hours per unit = 90,000

Connolly Company Produces Two Types of Lamps, Classic and Fancy