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

question 149

Multiple Choice

A company sells two products with information as follows: $$\begin{array} { | l | r | r | } \hline & \mathrm { A } & \mathrm { B } \\\hline \text { Sales price per unit } & \$ 12 & \$ 22 \\\hline \text { Variable cost per unit } & \$ 10 & \$ 10 \\\hline\end{array}$$ The products are machine made.Four units of product A can be made with one machine hour,and two units of product B can be made with one machine hour.The company has a maximum of 4000 machine hours available per month.Assume there are no constraints on sales of either product,and the company can choose any product mix they wish.What is the maximum amount of contribution margin that the company could earn in a month?

• A)$176,000
• B)$80,000
• C)$96,000
• D)$8000

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Definitions:

Consolidated Financial Statements

Financial statements that aggregate the financial position of a parent company and its subsidiaries into one document, showing the overall health of the corporate group.

Inventory Purchase

The acquisition of goods and materials that a company intends to sell, considered as a current asset on the balance sheet.

Perpetual Inventory Method

A method of accounting that instantly documents the sale or acquisition of inventory utilizing computerized point-of-sale systems and software for managing enterprise assets.

Gross Profit Rate

The ratio of gross profit (sales minus cost of goods sold) to net sales, showing the efficiency at which a company produces its goods.