Figure 13-5. 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.
Refer to Figure 13-5.What is the amount of machine time for model K-3 in terms of percent of a machine hour?
A)10%
B)20%
C)25%
D)40%
E)50%

Question

Quizplus · Accepted Answer

Model K-3 requires 15 minutes of machine time, which is 1/4 of an hour. Since there are 4,000 hours of machine time available, Model K-3 can use 1,000 hours, or 25% of the total machine time.