Alpha Company Produces Two Models of a Component: Model K-3

question 70

Multiple Choice

Alpha Company produces two models of a component: Model K-3 and Model P-4. The unit contribution margin for Model K-3 is $6, and the unit contribution margin for Model P-4 is $14. Each model must spend time on a special machine. The firm owns two machines that together provide 4,000 hours of machine time per year. Model K-3 requires 15 minutes of machine time; Model P-4 requires 30 minutes of machine time.
-Refer to the Figure.What is the contribution margin per unit of scarce resource (machine time) for Model K-3?

• A)$6
• B)$12
• C)$14
• D)$24

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