A Company Can Sell All the Units It Can Produce

question 73

Multiple Choice

A company can sell all the units it can produce of either Product A or Product B but not both. Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make. If there are 1,000 machine hours available to manufacture a product, income will be

• A) $2,000 more if Product A is made.
• B) $2,000 less if Product B is made.
• C) $2,000 less if Product A is made.
• D) the same if either product is made.

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Definitions:

Merge

To combine two or more entities into one, often referring to companies or datasets, resulting in integrated operations or information.

Promotional Activities

Marketing efforts designed to communicate the value of a product or service to customers to boost sales.

Free Ride

The act of benefiting from a resource, good, or service without contributing to the cost or effort involved in its provision.

Reap Benefits

To receive or gain advantages, improvements, or positive outcomes as a result of actions taken or efforts made.