Figure 25-2
Heft Company Produces a and B with Contribution

question 23

Multiple Choice

Figure 25-2
Heft Company produces A and B with contribution margins per unit of £40 and £30, respectively. Only 500 labour hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows: $\begin{array}{cc}&\text { Product A } & \text { Product B } \\\text { Labour hours per unit }&5 & 2 \\\text { Machine hours per unit }&1 & 4\end{array}$
-Refer to Figure 25-2. What is the objective function to maximize profits for Heft Company?

• A)Minimize 5A + 2B
• B)Maximize 1A + 4B
• C)Maximize 40A + 30B
• D)Minimize 40A + 30B

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Definitions:

Collateralized Debt Obligations

Collateralized debt obligations (CDOs) are complex financial instruments that pool together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.

Default Risk

The potential that a borrower will fail to meet the obligations of a loan or debt agreement.

Mortgages

Loans specifically designed for the purchase of real estate, secured by the property itself.

Sarbanes-Oxley Act

A U.S. federal law enacted in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations.