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

question 112

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 P-4?

• A)$12
• B)$14
• C)$24
• D)$28

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Definitions:

Interpersonal Relations

The interactions and associations between two or more people, including relationships of all forms.

Equity Theory

A concept in social psychology that posits individuals assess their relationships by analyzing the balance between their inputs (such as effort, time, money) and the outcomes (rewards, recognition) they receive, compared to others.

Tragedy of the Commons

Describes a situation where individual users, acting independently according to their own self-interest, deplete or spoil shared resources, leading to long-term consequences for the whole group.

Commons Dilemma

A situation where individual users of a shared resource act independently according to their own self-interest and deplete or spoil the resource through their collective action.