A company makes two products.The company can sell all of either product it can make.The relevant data for these two products follows:

Total fixed overhead is $250,000.The company has 100,000 machine hours available for production.The company should select which product to maximize operating profits?
A)Product A because it uses less machine time.
B)Product A because its contribution margin per machine hour is $5.00.
C)Product B because its contribution margin per unit is $10.
D)Product B because its contribution margin per machine hour is $6.67.

Question

A company makes two products.The company can sell all of either product it can make.The relevant data for these two products follows:

Total fixed overhead is $250,000.The company has 100,000 machine hours available for production.The company should select which product to maximize operating profits?
A)Product A because it uses less machine time. 
B)Product A because its contribution margin per machine hour is $5.00. 
C)Product B because its contribution margin per unit is $10. 
D)Product B because its contribution margin per machine hour is $6.67.

Quizplus · Accepted Answer

The Answer of A company makes two products.The company can sell all of either product it can make.The relevant data for these two products follows:

Total fixed overhead is $250,000.The company has 100,000 machine hours available for production.The company should select which product to maximize operating profits?
A)Product A because it uses less machine time. 
B)Product A because its contribution margin per machine hour is $5.00. 
C)Product B because its contribution margin per unit is $10. 
D)Product B because its contribution margin per machine hour is $6.67.

A Company Makes Two Products