Edison Company Produces Two Types of Piano Legs, Plain and Fancy

question 49

Multiple Choice

Edison Company produces two types of piano legs, plain and fancy, which have unit contribution margins of $8 and $12, respectively. Each piano leg must spend time on a special machine. The firm owns four machines that together provide 10,000 hours of machine time per year. The plain leg requires 0.25 hours of machine time, and the fancy leg requires 0.5 hours of machine time.
-Refer to the Figure.What is the contribution margin per hour of machine time for a fancy leg?

• A)$6
• B)$8
• C)$12
• D)$24

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Definitions:

Nominal Variable

A classification of categorical data where the order of the categories is not significant.

Dummy Variables

Variables used in regression analysis to represent subgroups of the sample in a binary form.

Grade Point Average

An average score representing the academic performance of a student, calculated from the grades obtained in their courses.

Indicator Variables

Dummy variables used in regression models to encode categorical data into numbers, typically 0 or 1, to include them in statistical analysis.