Business, 24.05.2020 04:57, steve12335
A company has three products possible products that it can produce in a machine intensive production process. Capacity is constrained by the number of hours the machines can run during a period and the products are so popular that all units produced will be sold. Here is additional information:
Product A Product B Product C
Contribution per unit $20 $30 $40
Machine hours per unit 2.5 3.25 4.5
Which of the following would be an accurate conclusion based on these facts?
A. Since Product C has the greatest contribution margin per unit and therefore emphasizing its production and sales will lead to the highest operating income in the short-run
B. Since A takes less time to produce, maximization of operating income will occur by emphasizing production and sales of A.
C. A balanced mix of 1/3 A, 1/3 B, and 1/3 C should be the goal when maximizing operating income in the short-run.
D. Product B should be emphasized if the goal is to maximize contribution margin.
Answers: 2
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