Product a Requires 5 Machine Hours Per Unit to Be

question 13

Multiple Choice

Product A requires 5 machine hours per unit to be produced, Product B requires only 3 machine hours per unit, and the company's productive capacity is limited to 240,000 machine hours. Product A sells for $16 per unit and has variable costs of $6 per unit. Product B sells for $12 per unit and has variable costs of $5 per unit. Assuming the company can sell as many units of either product as it produces, the company should:

• A) Produce only Product A
• B) Produce only Product B.
• C) Produce equal amounts of A and B.
• D) Produce A and B in the ratio of 62.5% A to 37.5% B.
• E) Produce A and B in the ratio of 40% A and 60% B.

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Definitions:

Fundamental Attribution Error

A cognitive bias that involves overestimating the effect of personality or disposition and underestimating the effect of situational factors when interpreting the behaviors of others.

Defensive Attribution

A psychological process by which individuals tend to attribute more blame to victims and less to perpetrators when they see themselves as similar to the victim.

Behavioral Tendency

An inclination or predisposition of an individual to exhibit certain patterns of behavior.

Intuition

The ability to understand or know something immediately, without conscious reasoning.