Product a Requires 5 Machine Hours Per Unit to Be

question 156

Multiple Choice

Product A requires 5 machine hours per unit to be produced, Product B requires only 3 machine hours per unit, and the company's productive capacity is limited to 240,000 machine hours. Product A sells for $16 per unit and has variable costs of $6 per unit. Product B sells for $12 per unit and has variable costs of $5 per unit. Assuming the company can sell as many units of either product as it produces, the company should:

• A) Produce only Product A.
• B) Produce A and B in the ratio of 40% A and 60% B.
• C) Produce A and B in the ratio of 62.5% A to 37.5% B.
• D) Produce only Product B.
• E) Produce equal amounts of A and B.

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Definitions:

Innovation

The creation of new ideas and their implementation or commercialization.

Limited Value

Something that has restricted worth or importance, often due to specific conditions or contexts.

Insight Step

The process of gaining a deep understanding of a complex situation or problem, often the first phase in problem-solving or decision-making.

Creative Thinking

The ability to think in novel ways, generate new ideas, and devise unconventional solutions to problems.