Practice Question 8 Product A has a unit contribution margin (UCM) of $200 and P
ID: 2375128 • Letter: P
Question
Practice Question 8
Product A has a unit contribution margin (UCM) of $200 and Product B a UCM of $100. Product A takes 10 hours to produce and Product B takes 2 hours to produce.
a. What is the contribution margin per hour for Product A?
b. What is the contribution margin per hour for Product B?
c. If the company has a limited number of hours available, which product should be produced first?
d. If the company has a 1,000 hours available and can sell a maximum of 300 units of Product A and 200 units of Product B, how many units of each could be produced?
Explanation / Answer
Product A has a unit contribution margin (UCM) of $200 and Product B a UCM of $100. Product A takes 10 hours to produce and Product B takes 2 hours to produce.
a. What is the contribution margin per hour for Product A?
$20 per hour
b. What is the contribution margin per hour for Product B?
$50 per hour
c. If the company has a limited number of hours available, which product should be produced first?
Product B
d. If the company has a 1,000 hours available and can sell a maximum of 300 units of Product A and 200 units of Product B, how many units of each could be produced?
Company should prouce :
Product B = 200 unit
Product A = (1000-200*2)/10 = 60 Unit
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