The Following Are Production and Cost Data for Two Products

question 34

Multiple Choice

The following are production and cost data for two products, A and B, produced in batches of 100 units. $\begin{array}{lrr}&\text { Product A }&\text { Product B }\\\text { Contribution margin per batch } & \$ 450 & \$ 340 \\\text { Machine set-ups needed per batch } & 25 & 20\end{array}$ The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the incremental profit from producing Product A instead of Product B for the year?

• A) $216,000
• B) $204,000
• C) $12,000
• D) $54,000

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Definitions:

Laissez-Faire Capitalism

is an economic system where transactions between private parties are free from government intervention, such as regulations, privileges, tariffs, and subsidies.

Economic Functions

Concern the roles and operations of an economy, including production, distribution, and consumption of goods and services among individuals and organizations.

Private Property

A legal designation for the ownership of property by non-governmental legal entities.