Sky Mountain Bakery Makes Doughnuts,cupcakes,and Scones That Are in High

question 104

Multiple Choice

Sky Mountain Bakery makes doughnuts,cupcakes,and scones that are in high demand by local restaurants and hotels.Following is information for each of these products: Sky Mountain has 2,000 machine hours available each month.Demand for each item exceeds Sky Mountain's capacity to produce the item.In order to maximize the company's total contribution margin,in what sequence should Sky Mountain fill orders for the three products?

• A)Scones first,then cupcakes,then doughnuts.
• B)Doughnuts first,then scones,then cupcakes.
• C)Cupcakes first,then doughnuts,then scones.
• D)Scones first,then doughnuts,then cupcakes.

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Definitions:

Comparative Advantage

The ability of a country or firm to produce a specific good or service at a lower opportunity cost than its competitors.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choice.

Specialize

The process of concentrating on and becoming expert in a particular subject or skill, often used in the context of labor and production.

Produce

Produce generally refers to agricultural products, especially fresh fruits and vegetables, harvested for human consumption.