Magnitude Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labor hours and 300 machine hours are available for production. Time requirements to produce one unit of A and B are as follows:
Product A Product B
Labor hours per unit 5 2
Machine hours per unit 1 4
What is the constraint on machine hours for Magnitude Company?
A) 1A + 4B ≤ 300
B) 5A + 2B ≤ 500
C) 1A + 4B ≤ 500
D) 40A + 30B ≤ 500

Question

Quizplus · Accepted Answer

The constraint on machine hours is determined by the total machine hours available and the machine hours required per unit of products A and B. Since product A requires 1 machine hour per unit and product B requires 4 machine hours per unit, the constraint is 1A + 4B ≤ 300.

Magnitude Company Produces a and B with Contribution Margins Per