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

question 2

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.Suppose Alpha Company can sell only 5,500 units of each model.How many units of Model K-3 should be produced?

• A)312
• B)1,250
• C)2,750
• D)5,000

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Definitions:

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