A Company Sells Two Products with Information as Follows Products Are Made by Machine

question 90

Multiple Choice

A company sells two products with information as follows: $$\begin{array} { | l | r | r | } \hline &{ \text { A } } & { \text { B } } \\\hline \text { Price per unit } & \$ 12 & \$ 20 \\\hline \text { Variable cost per unit } & \$ 10 & \$ 12 \\\hline\end{array}$$ Products are made by machine. 4 units of Product A can be made with one machine hour and 2 units of Product B can be made with one machine hour. The company has a maximum of 3,000 machine hours available per month. Assume there are no constraints on sales of either product, and the company could choose any product mix they wish. What is the maximum amount of contribution margin that the company could earn in a month?

• A) $16,000
• B) $18,000
• C) $48,000
• D) $22,000

Apply knowledge of forecasting methods to interpret and evaluate sales data.

Understand and apply the accounting equation and its components (assets, liabilities, equity).

Analyze and prepare basic financial statements (income statement, balance sheet, statement of retained earnings).

Describe the effects of business transactions on the accounting equation.

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