Santorino Company Produces Two Models of a Component, Model K-3

question 107

Multiple Choice

Santorino Company produces two models of a component, Model K-3 and Model P-4.The unit contribution margin for Model K-3 is $6; 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.
-
What is the amount of machine time for model P-4 in terms of percent of a machine hour?

• A) 10%
• B) 20%
• C) 25%
• D) 30%
• E) 50%

---

Definitions:

Taxpayers

Individuals or entities that are required to pay taxes to a federal, state, or local government.

Long-Term Care Insurance

Insurance coverage designed to provide for the cost of long-term care services, including nursing home care, assisted living, or home caregiver services, potentially offering tax deductions for premiums paid.

Medical Expenses

Costs associated with the diagnosis, cure, mitigation, treatment, or prevention of disease, and expenses for treatments affecting any part of the body, potentially tax-deductible.

Deductible

An expense that can be subtracted from adjusted gross income to reduce taxable income, thereby lowering tax liability.