Morgan Inc Has 5,400 Machine Hours Available Each Month If Market Demand Exceeds the Available Capacity,in What Sequence Should

question 116

Multiple Choice

Morgan Inc has 5,400 machine hours available each month.The following information on the company's three products is available:
$$\begin{array} { | l | r | r | r | } \hline & \text { Product } & \text { Product } & \text { Product } \\& 1 & 2 & \mathbf { 3 } \\\hline \text { Contribution margin per } & \$ 15.00 & \$ 18.00 & \$ 7.50 \\\text { unit } & & & \\\hline \text { Machine hours per unit } & 3 & 2 & 1 \\\hline\end{array}$$
If market demand exceeds the available capacity,in what sequence should orders be filled to maximize the company's profits?

• A) Product 1 first,product 2 second,and product 3 third.
• B) Product 2 first,product 3 second,and product 1 third.
• C) Product 3 first,product 2 second,and product 1 third.
• D) Product 3 first,product 1 second,and product 2 thirD.
• P1 CM/hr = 15/3 = $5;P2: 18/2 = $9;P3: 7.50/1 = $7.50

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Definitions:

Fixed Salary

A set amount of money paid to an employee by an employer at regular intervals, regardless of hours worked, providing income stability.

Expected Value

A statistical concept that represents the average outcome when the same event is repeated multiple times.

Utility

In economics, the satisfaction or pleasure that consumers derive from consuming goods or services.

Risk-neutral

An attitude towards risk where an individual values all outcomes equally without preference for risk.