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

question 89

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. The company can sell up to 7,000 units of Product A per month, and up to 3,000 units of Product B for the month. What is the maximum amount of contribution margin that the company could earn in a month given the stated constraints?

• A) $10,000
• B) $36,000
• C) $30,000
• D) $40,000

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Definitions:

Internal Rate Of Return

Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of potential investments by calculating the rate of return that sets the net present value of all cash flows to zero.

Economic Ratings

Evaluations or rankings based on financial performance, stability, or investment attractiveness of entities or countries.

Project Champions

Individuals within an organization who advocate for and support a project, ensuring it receives necessary resources and attention.

Variable Costs

Costs that change in proportion to the level of activity or volume of production in a business.