A Business Makes Three Different Products, the Details of Which

question 13

Multiple Choice

A Business makes three different products, the details of which follow: $\begin{array}{llll}\text { Product code } & \text { A1 } & \text { A2 } & \text { A3 } \\\text { Selling price } & \$ 50 & \$ 46 & \$ 40 \\\text { Variable cost } & \$ 20 & \$ 24 & \$ 16\\\text { Weekly demand-units } & 50 & 40 & 60 \\\text { Machine time per unit } & 4 \text { hours } & 4 \text { hours } & 6 \text { hours }\end{array}$ The maximum machine time available is 350 hours per week. How many machine hours should be spent manufacturing product A3?

• A)35 machine hours.
• B)240 machine hours.
• C)120 machine hours.
• D)None.

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Definitions:

Receivables

Amounts owed to a business by its customers for goods or services delivered on credit.

Bad Debts

Unrecoverable amounts from debtors, considered a business expense when it's clear the debtor is unable to meet the obligation.

Adjustment

The process of making modifications to financial records or accounts to ensure their accuracy and compliance with accounting principles.

Income Statement Approach

A method of estimating certain account balances within an income statement, focusing on revenues and expenses to indirectly calculate other figures.